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The global economy is now fragile and uncertain, the way out of recession has to be through the development of an internal market with manufacturing and agriculture leading the fight. Those who believed we could build our economy on providing fininacial services have completely lost the argument. Now it is time for a new strategy to create a new economy. One that creates jobs by supplying the domestic market. This will also allow us to have lower interest rates as we won't need to keep interest rates high in order to protect us from importing inflation. This in turn will mean more liquidity and a more dynamic economy. An internal market will also allow us to balance supply and demand, meaning that we will have economic equilibrium and stable pricing.

This article highlights the fact that our collective eye has been taken off the ball by the unedifying events of the last week! This of course was Labour's intention...
We need to get back into focus.

Tim. Language matters. By allowing "downturn" to be used, you are implicitly accepting the Labour line. It's a RECESSION caused in no small part by Brown's complacency, his war with Blair, his overweening arrogance and his ineptitude. Lets keep our eye on the ball.

I agree that the emphasis of Tory economic policy seems, outside John Redwood's blog, to be more on not scaring the electorate than coming up with the drastic action which the situation requires. Lets see what comes out of the pot today.

One thing is clear a Keynesian induced Government spending will have a limited effect, for as we produce so little now and with most of our industries flogged off to foreign owners who will look after their own national interests first, most of this Keynesian spending splurge will haemorrhage abroad adding to our mountain of debt, just as much of our recent consumer consumption went on Chinese or German made products.

So unless we can direct Government spending to areas which will support the British economy without the cash haemorrhaging abroad, which I somehow doubt is possible, then the situation here looks pretty bleak, with the best hope for the economy is that we are one of the last out of the world recession, so allowing our industries to pick up some of the crumbs from the economies which are growing.

Very dangerous game. Talking about cutting taxes would leave the Conservatives wide open to attacks of recklessness and harking back to the past. I'm not sure that this risky approach is sensible given the economic climate. The last thing the Conservatives need right now is controversy!

It is not the policy that ConHome would have chosen (we are attracted to the Lilico plan of large but time-limited tax reliefs) but it is a credible policy and needs to be explained.

You mean like the $150bn George Bush borrowed, which gave a single quarter blip and is now unrecoverable debt?

Posted by: Tony Makara | October 27, 2008 at 09:11
Those who believed we could build our economy on providing fininacial services have completely lost the argument.
Margaret Thatcher and her vegetables? I have to agree. I only wish Blair and then Brown hadn't followed her example.

One of the few things an opposition can do is suggest ideas and make the case for them in the hope they will be taken up. We may have a hope of being in power in 18 months, but action is needed now.

One thing we should be calling for is a re-start of the Doha Round trade talks and we should be encouraging a really bold move on agricultural tarrifs and subsidies. Namely, that they should end, entirely, very soon.

If we used a small amount of the bail out money to bung farmers 18 months' worth of subsidy and ended trade barriers, it would open up trade and investment opportunities and lift global growth, possibly by as much as 0.5%. That is worth having and if we use this crisis to liberalise world trade, rather than to reverse that trend, we will do a great deal for the poorest nations while fighting against the insidious protectionist trend which has historically followed events like those we face now, with disasterous consequences!

"The last thing the Conservatives need right now is controversy!"

I don't care what the Conservatives need. The question is what is required to minimise the effects on the depression (for that is what it will be) on the country and to encourage "real" industry?

If the Conservative want to be part of the future then they had better start making plans for the future.

The biggest problem we face is that we have become a one-way economy, we import and sell-on the produce of other nations but no longer produce and export enough of our own wares. The British economy is seriously unbalanced. The end of one era allows us the opportunity to address this problem. We need to become a nation that creates once again, a nation that measures its economic health in terms of jobs and trade surplus rather than merely counting cash-flow.

I'm sorry grumpy old man; I have no objection to the term recession.

Why not do something real, and speak to a selection large companies to see what kind of tax reduction would woo them to set-up in Britain?

Then the Tories could confidently say that our current business tax burden is actually scaring off investment, so reducing our tax burden to x would actually lead the the creation of y jobs in the poorest parts of the country.

It is time to move from theory to reality to offer some tangible gains that Mr Lilico's approach could offer.

The conservative approach should be to give people the tools and let them get on with it.

Government (taxpayer) spending might make a difference if it went to local companies with local employees using local suppliers.

But throwing taxpayer money at international companies who offshore as much of their workforce as posssible, who employ migrant workers in the UK, whose head offices are being moved out of the UK, who get their supplies from outside the UK, and which are probably structured to pay no tax anyway -- this is not acceptible.

The use of such companies by private individuals and private companies is fine (as long as it is all legal), but it is wrong to make me hand my money (via taxes) over to such organisations - it will only help make me (and the country) poorer.

Capitalism works by letting the good suceed and the bad fail -- it is often not possible to know which is which until you try - failure is not necessarily a reflection on the individual, it is part of the process.

Back people who want to be backed, let the market decide the outcome.

Slash spending, balance the budget and hold on tight. Do NOT raise taxes. Cut them if possible. Keynesianism may give us a short-term boom but it will only culminate in a bust.

And if you want to be really radical, shut down the BoE and de-nationalise the currency...

Brown is on telly now with his speech. On the face of it he comes across almost quite plausibly but you really have to pinch yourself. This guy has been at the financial helm for 11 years, he just doesn't seem to get this or even begin to accept it. Many of the things he is advocating people were telling him to do years ago and he didn't do them. The UK has collosal debt and we have not done the things that would have cushioned us to the recession. This is a confidence trick on the usual New Labour scale. We've all said before that Blair used to spin but what has not been fully relaised is that Brown is the super-spin artist. He says such ludicrous things because in some bizzare way he believes his own fibs. This is more of the same. If we can't have a Govt that faces upto reality and what it has done then there is no chance we can build a positive future. Still the spin continues and its poison spreads across the body politic via the likes of Mandelson to consume all before it. Still Brown smiles on and spins on.

There really isn't much point in doing anything sizeable as the economy starts to contract. Whatever you do will either end up looking insubstantial or will end up being overtaken by events. We need to avoid making things worse and then as things get better lighten the load.

The most important point is that 'we get out there' with a coherent strategy. Personally I'm not attracted by the 'Lillico plan' at all nor by spending absurd amounts on public projects that may cause a temporary boom bus as others have pointed will eventually result in a bust with grievous results for our currency.
We need to show how we can reduce borrowing over the medium and long term,which areas of government waste can be cut to finance that and then a series of measures to mitigate the harshest results of this recession.Some unpopular decisions need to be made but I think the Conservative party will gain kudos with a sceptical electorate if it spells these out.

I broadly agree with James Burdett.
However, I think that it now time for George Osborne to get "out there" again, absorb and shrug off the inevitable opposition and media punches, and get back on course.
Mr Osborne is master of his economic brief. He made arguably the most memorable speech of the Conference week. He was also great in the opening chat-show format session with REAL people.
We need him back in visible harness again, or he will start to look seriously & unnecessarily vulnerable.
I have heard more than one traditionalist backward-looking type call for John Redwood to replace Mr Osborne. And what sort of message would THAT send!

If Labour steal the ideas and things work out, point out whose idea it was.

If an idea is in the news debate the meritsof it, at least a Tory will be on the screen.

This should be bread and butter to the opposition, if it isn't what are they doing being MP's in the first place.

As it stands most of the country don't want Labour as the next government, but there's a saying-better the devil you know....

There has to be an alternative, spell it out, don't sit on the fence and wait

"Mr Osborne is master of his economic brief. He made arguably the most memorable speech of the Conference week. "

Then why did he not foresee the coming recession long ago, as most economically literate people did (though not the scale of the banking crisis)? Why, until a few weeks ago, was be talking about "sharing the proceeds of growth"?

George Osborne has no experience of anything other that St Paul's School, Oxford and the Tory Party. That is why he lacks judgement. He should be replaced.

we all forsaw the downturn; Osborne most particularly if you look at speeches he has made over the past twelve months. unfortunately, it would have done us no political favours to be regarded as purveyors of doom, when people were still enjoying the fruits of the credit-led boom.
we would have been accused of talking down the economy.

"we all forsaw the downturn"


May 2007: Tory Party announces a paradigm shift from an econocentric to a sociocentric one.

From Letwin when this was announced:
"the capitalist/ socialist debate has in general ceased to dominate modern politics. From Beijing to Brussels, the free market has won the battle of economic ideas."

Less than 18 months later, this has been proven to be 100% inaccurate as government's start nationalising previously privatised companies etc and never has the free-market/socialist debate been so dominant.

Please don't embarass yourself. The Tory Party got it 100% wrong.

Please don't embarass yourself. The Tory Party got it 100% wrong."

Posted by: GB£.com | October 27, 2008 at 12:52

GB£.com you seem to have been away a long time. The Tories, Hague and Portillo, were fortelling this in 2000 but no one wanted to listen, like you they wanted to believe that wonderful New Labour had abolished all awkward economic problems.

This isn't just a downturn, it is an inevitable consequence of the economic policies of the last 11 years.

In the 1980s and 1990s many uneconomic industries were scaled back or shut down, but there was also a substantial amount of inbound industrial and commercial investment. That fell of the edge of a cliff after 1997 although the government statistics on investment and capital expenditure are distorted by the figures from PFI/PPP and the Tonnage Tax regime for shipping. Inbound investment into the UK since 1997 has been largely realted to property.

Where are the dynamic private sector businesses where the UK will be a world leader? In the City, Lloyds is less dominant in the insurance market, the UK merchant banks have pretty much disappeared and most of the big players are foreign owned. The only city sectors where UK firms are amongst the world's top firms are commercial law and arguably accountancy although the latter is questionable as to the extent to which any of those firms are still British.

Outside the City, the UK can hold its own in pharmaceuticals, we are quite good at paints, some chemicals and specialty glass, we have large oil and gas companies just like every other large country and that is pretty much it apart from whisky and bagpipes.

Where are the high value industries of the future? The new materials manufacturers? The robotics companies? The renewable energy equipment manufacturers? Sadly, they are all elsewhere. The BERR (DTI) is a joke and the minister in charge is a disaster waiting to happen.

When does a recession become a catastrophe? Stop niggling about silly little recessions! We have a Socialist inspired financial £ trillion disaster yet again.

All Labour ministers since 1997 should be made personally liable for the £trillion crash we are seeing the start of. These Labour financial wizzards can of course nominate civil servants who were involved as fellow can carriers.

Until these people are hit in the pocket, ministers of what ever party will have little respect for consquences. An example must be made and it starts here.

The difficult part is to be able to explain the economy in simple terms: how about G Brown "credit card" policy...
with most people maxed out on cc they might relate to the folly of borrow and spend policies of "?new" labour

Having run the economy aground, Brown chooses to refloat the ship of state by spending massively on yet more tar and rope. It would be far better to install better instruments for navigation and perhaps a fresh crew. Abast ye me harties!!!

More and more people have to see how Brown laughs at a crisis he created because he thinks he's got away with it and can just blame the Americans or the rest of the world.

Please watch this and pass it on so more and more people know about him.


GB£.com you seem to have been away a long time. The Tories, Hague and Portillo, were fortelling this in 2000 but no one wanted to listen, like you they wanted to believe that wonderful New Labour had abolished all awkward economic problems.

thanks for expanding this point, David Sergeant. If people don't want to listen, they will not hear.
BTW - someone obviously reads this blog, as George Osborne was on World at One. taking the punches well and hopefully this will be the first step to moving on...

Yes moving on a wounded but not yet deaded hopeful, Lets hope George gets the message "we don't want any return of sleaze"
You have to admire Mandelson, but this was in the end a storm in a teacup. Thanks George you kept our minds off the sliding Market.

Oh yes now exactly what was your policy.

The Policy vacuum is killing our lead BTW.
Tell us a story, even if it’s a penny dreadful, even if it’s hard to swallow.
Tell us what your remedy would be. Tell us like it is…
Even if it means we are planning for swinging CUTS.

Even if you just tell the people that they are not yet ready for the Truth, it would give US
The edge, at least we could be sowing the seeds. Do we want to lead sleepwalkers or active participants; I suggest the latter is the way to Victory. Do we organize for social unrest; or sensible set the tone for the disciplined approach that is necessary to get us through as One Nation intact.

Trust the people they are ready to be told the worse.

The worst is happening to our fellow subjects every day. Lets leave Captain Gordon and the Titanics to sing the "I'm In Control, lets spend some more", song. Nobody believes Gordon's reassuring little white lies anymore. People are running scared because of a lack of believable information. Let's fill the void. Telling the truth will be far more effective than any more spin. The electorate need a government who can be trusted to speak with authority, which they won't get until 2010. So lets give them a government-in-waiting that speaks the truth with authority instead.

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