The latest growth figures are disappointing

But I think a blip rather than a trend. Snow and negative sentiment about Vat rises probably have more effect than we realise.

I haven't noticed that huge a jump in prices this year, maybe prices were already higher at the end of last year - which would mean that the increase in VAT would have less impact on this quarter.

I know that I am predisposed towards believing that the coalition has got the economy right, but I think that growth will rebound in the next quarter figures. I also, by the way, believe that these figures will be revised upwards.

So cheer up, it will get better.

Squiffy.

Resignation, resignation everywhere

What a couple of days. Yesterday it was Alan Johnson, today it's Andy Coulson. It seems to me that both were pre-emptive before news leaked. Maybe there is some new information coming out which would have forced Andy Coulson's hand? I guess we'll find out shortly. It is true to say that his position had become a distraction, similar to Lord Ashcroft's.

If the papers are to be believed Alan Johnson's departure was triggered by his wife having an affair with a protection officer. Gives a new meaning to "better hope she used protection", but enough smut. It sounds like Mr Johnson has been going through a tough time lately, and with the added focus on his position of Shadow Chancellor, it would have been extremely difficult to keep his mind on the job.

When he was appointed, I, like many people, was surprised. With Ed Balls and Yvette Cooper both having had jobs in the Treasury they seemed like the more obvious choices as Shadow Chancellor. Maybe Ed Balls' outspoken criticism of Alistair Darling's deficit reduction plan or maybe the rivalry with Ed Miliband from their time together as Gordon Brown underlings, counted against him. Maybe Yvette Cooper's popularity in the Shadow Cabinet elections counted against her. Hence why Ed Miliband chose to put Ed Balls at the Home Office as an attack dog so that he could have his own economic policy, and Yvette Cooper in the invisible role of Shadow Foreign Secretary so that she doesn't steal the limelight.

Now that has been undone. Yvette moves to the Home Office to hound Teresa May, that should be fun. More fun will be the exchanges between George Osborne and Ed Balls. As in Hart to Hart, "when those two get together, it could be murder".

Maybe Labour is the winner, but it looks like Ed Miliband is the loser. His plan has come unstuck. The two people at the Treasury when the banks and spending let rip, are at the head of the Labour party as 'deficit deniers', and the Tories will stick that label on them ad nauseam. Maybe George Osborne is a little more worried now, but he's faced Gordon Brown before, and now he has his mini-me.

Should be fun.

Squiffy.

PMQs A New Year Comeback

It was the first PMQs of 2011 and can be decisively given to David Cameron. He was truly on top of his game, and batted Ed Miliband around the House.

Although Ed Miliband did have a point about their one-off bank bonus tax bringing in more money than a signle year of the coalition's bank levy he was completely outshone by the overall figures which David Cameron was able to announce. The killer line was "The Shadow Chancellor can't count and the Labour Leader doesn't count."

He also had a great line when asked about U-turns by the SNP's Angus Robertson. The PM came back with the point that the SNP had U-turned on their Scottish Independence bill.

Cameron: 9, Miliband 4

Squiffy.

Ed Miliband's Myth about a Myth

This morning I read in The Times that Ed Miliband is angry that the coalition is perpetuating the 'myth' that the deficit is the fault of the previous Labour Government, whereas, he says, it was the fault of the recession.

It's pure and simple really.

The effects of the previous Government's spending is what can be seen in the structural deficit (this is the amount that the Governments spend minus its income if there were not a recession). Normally the structural deficit would not be entirely down to the Government, but the last Government had a good spell early on and actually ran a surplus for some years, it then went on a spending splurge and the deficit got wider and wider, even during a period of growth.

There is of course an amount of the deficit because of the recession, this is the non-structural part, but this can be reduced when the country returns to growth due to the 'automatic stabilisers'. In recession, tax receipts are down and unemployment benefits go up, in growth these trends reverse.

So, to judge Ed Miliband's 'myth' let's look at the total numbers. The total budget deficit for this year was due to be £155 Bn, the structural deficit is predicted (by the IFS) to be around £90 Bn of that, i.e. 58%. I believe that the structural deficit reduction plan is nearer £100 Bn or 65%.

Either way, the majority of the deficit is structural and therefore a fault of the previous Government. So, Ed Miliband's 'myth' is a myth itself.

He also said, in the article, that he is not opposing every cut. Which cuts does he support then? No answer.

He opposes the VAT rise, which brings in £13 Bn per year, but what is his alternative? The employer NI rise, that the new Government stopped, only brings in £3 Bn, and there's some loose talk about bank bonuses but nothing tangible. Also, given that Labour want to put the deficit reduction burden further onto taxes (from 80:20 cuts to taxes to 60:40) where are all the extra taxes coming from? There came no answer.

Verdict. Ed Miliband must do better.

Squiffy.

2011 Predictions

Having made a fool of myself with the 2010 predictions, it could be tempting to get out of the prediction business altogether but it's a little bit of fun so why not.

Here's my predictions for the year ahead:

1. David Laws will make an early return to Government, in a reshuffle sometime in January or February.
2. The AV referendum will be narrowly lost, but on a low turnout.
3. Vince Cable will walk out of the Government.
4. Ed Miliband will have a poor year despite the polls and there will be a whispering campaign around to bring his brother back.
5. Diane Abbott will walk out of her shadow portfolio.
6. The coordinated strikes threatened for Easter will be a damp squib compared to the jollity of the Royal Wedding.
7. Sebastien Vettel will be F1 World Champion again, just beating Lewis Hamilton.
8. Michael Schumacher will walk away from F1 mid-way through the year.
9. CPI Inflation will hit 4.0%, but we will have annual growth of 1.8%.
10. The parties will end the year on: 39% Tories, 42% Labour, 12% LibDem.

Squiffy.

The 2010 predictions verdict: Rubbish

Every year I make some predictions for the year ahead, and then I have to face the consequences. Well it's clear that I was absolutely rubbish this year. Let's mark them:

1. The Tories will win the election with a majority of around 80. Many people think it will be tighter than that, but I think the polls overstate the Labour position. 0 points
2. The election shares will be Tories 43%, Labour 27%, Lib Dems 24%. 0 points
3. Gordon Brown will be succeeded by Harriet Harman. (They should chose Andy Burnham) 0 points
4. Lewis Hamilton will win the F1 World Championship. 0 points
5. Michael Schumacher will win 3 races this year. 0 points
6. David Davis and Malcolm Rifkind will be in the Cabinet. 0 points
7. The country will have recovered last quarter but will enter it again this quarter. It will re-emerge in the 3rd quarter. 0 points
8. CPI Inflation will hit 3.5% by years end. Close, 1/2 point
9. Lord Mandelson will renounce his peerage in an attempt to rejoin the commons. 0 points
10. The first Cabinet Minister to resign will be Alan Duncan. 0 points

So, basically, an absolute shower. Half a point out of 10, a very bad showing. In politics, it was much closer than I thought and the coalition has really changed the political landscape. In Formula 1 we had a great year, one of the best and I hope 2011 will be even better.

Squiffy.