Borrowing Brown Blown Out Of The Water

Borrowing Brown's bonkers crusade for a painful cure-all fiscal stimulus has been blown out of the water after 'surprise' inflation figures left him at odds with the Bank of England boss, his chancellor and most of the world. 

Brown's hyped-up Save The World ego tour and London G20 plan is in tatters. 

In the economic La-La Land of making it up as you go along, today's widely predicted inflation figures were supposed to show the Retail Price Index (RPI) sinking into dangerous deflation while the government's much-loved Consumer Price Index (CPI) dropping like a lead balloon. 

Only they didn't. Headline RPI fell to 0 percent in February, its lowest since 1960, from 0.1 percent in January, while the CPI actually rose to 3.2 percent in February from 3 percent. 

But the government is a victim of its own spin and deserves all it gets. The neat trick of the CPI was brought in by Brown during the false boom years as the government's preferred spin to measure inflation. Now it's coming back to haunt them. 

That left Bank of England boss, Mervyn King, who prefers RPI, in a pickle, forced to drop a line to hapless Darling explaining why CPI inflation is more than a full percentage point above the official 2 percent target. 

Darling will be rubbing his hands with glee and then putting two fingers up to Brown who's still bent on a massive borrowing binge and spending spree. 


What is happening is plain to see. RPI is zero because mortgage costs and house prices have taken a dive. Take out housing and CPI, which measures the cost of what people are buying, has risen. 

Any fool can see inflation has increased. The devaluation of the pound in our pocket has made us poorer. Food bills are going up, water rates have risen, while savings interest has dropped.

The price of food and drink is soaring. Cigs are going up. Imported goods like clothing and footwear are now falling less fast because of the weakness of the pound, which has raised the price of imported goods. 

Inflation is the proverbial Monty Python parrot. It isn't dead, it's just resting. And could soon return.

The Orange Party has long warned the government's reckless fiscal stimulus, unprecedented borrowing and printing of money could unleash a huge inflationary hurricane leaving behind the debris of debt.
 

But a much-needed steady hand on the economic tiller isn't happening, as deluded Brown, obsessed with his multi-billion pounds borrowing stimulus is getting increasingly short shrift from many, apart from his new best friend Obama, who has the luxury of four years to run himself out of his economic hole. 

Ben Brogan reports, King dropped a bombshell in his evidence to the treasury select committee.  He doesn't think there is a case for another fiscal stimulus. 

And that's the very same economic stimulus on which Brown is pinning all his hopes at the G for Gordon 20 summit and in the very budget where he's been forcing a reluctant Darling to write his own political suicide note and pump-prime the economy with more of Brown's borrowed billions. 

The head of the European Central Bank, Sarkozy of France, Merkel of Germany, the boss of the IMF and now the Bank of England governor are all backing off from another bonkers borrowing boost, leaving an obsessive Brown increasingly alone in his own little world. 

Making sense of it all is a nightmare for sure but without that steady hand on the tiller, deflation or inflation are economic killers.  

Burning Our Money is, as usual, on the money: "Our currency is being systematically debauched. Interest rates have been slashed, the printing presses are roaring, and savers are being raped."

What's needed is a sound strategy - and a leader. Answers on a postcard to: G. Brown, the Bunker, Downing Street, for when the Supreme Leader gets back from his South American pre-election PR jolly. 

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Printing Money Is A Recipe For Disaster

Conflicting inflation figures left some confused. The borrowing debt is set to run into trillions of pounds. The government is set to start 'printing money'. Brown is a victim of his own economic spin. His past false boom years are coming back to haunt him. 

Lies, deceit and spin go hand in hand with the New Labour project but it's in the death throes of the disaster of the economy where the public feel it most. 

Brown and Downing Street have tried every trick in the book to play down the crisis because to admit the truth is to admit past mistakes. There are signs the 'narrative' is changing but it's too late for all that now. 

The real economy is already deflating. Printing money will just make matters worse.

The Retail Price Index (RPI) which includes housing costs is at a 49-year low of 0.1%. But the government's preferred Consumer Price Index (CPI) is stuck at 3%. The RPI has taken a dive because of falling property prices and sinking mortgage interest payments. 

Grave misjudgements were made in the past over which inflation figure to use. Now the Bank is being forced to target CPI to dig the country out of a hole. 

But CPI will catch up later in the year with heavy discounting which is likely to put both measures of inflation into negative deflation territory. 

Back in 2003 as chancellor, Brown switched the inflation target from RPI to the more accommodating CPI.

With house prices soaring, it made sense to spin a measure of inflation that excluded property. And that would allow the Bank of England to cut interest rates.

If the Bank had been allowed to target RPI then interest rates would have remained higher.

Either way, the inflation slump leaves the country dangerously close to outright deflation, with reports the Bank of England is to begin the abhorrent and disreputable method of 'printing money' within weeks, as a quick fix. 

Any government which has to resort to 'printing money' is on its beam ends, with the threat of a new bout of inflation always lurking round the corner.

Inflation will rise while the economy continues to stagnate. The toxic mix of high inflation and near-zero growth leads to 'stagflation'. Brown's government will be the laughing stock of the world. 

The country is hopelessly in debt and borrowing is at a record high. But the government still wants to 'print money' to fund a reckless borrowing binge and ludicrous public spending spree. Sooner or later a new government will have to confront the underlying problems in the economy.

The Orange Party believes the route out of this economic mess is easy to see but because of its past record, impossible for this government to follow. 

There's must be an end to reckless borrowing which will saddle people with debt for decades to come. Hugely expensive white elephants, vanity and legacy projects must be scrapped. UK manufacturing, which is the key survival, must be boosted and supported to kick start the economy, with proper jobs, not the New Deal sham. 

A recent C4 documentary, Dispatches, saw Brown's former trade minister, Lord Digby Jones, despair at the dire state of fiddled jobs figures and blatant, totally meaningless jobs propaganda, while the manufacturing heart of the country is being ripped out. 

Jones is in no doubt: "Brown borrows billions to bail out the banks, he is letting manufacturing fall into an abyss." 

While other countries were protecting their manufacturing skills base, here the New Labour project saw the future wealth in creative and emerging technologies - and the City. Oh dear. 

The recession depression will last for a decade or more. A government, any government, has to  take steps now to preserve jobs, skills and factories or, as Jones warns, "we could blight an entire generation with long-term unemployment and the economic balance of Britain will not be sustainable."

Instead, the government flounders and flannels around printing money and borrowing more as its only escape route, trying to make a shiny silk purse out of an old sow's ear.  

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Inflation Spin Masks Dire Deflation

Government inflation figures are masking the dire state of the economy as ministers have become victims of their own spin. Today's official figures hide what lies beneath, as the country spirals down into dangerous deflation. 

Even the government's own official and well-spun inflation figure has sunk to 3%, craftily hiding the true fall. Things must be really getting bad for the economy.

Inflation dropped to 3% in January, down from 3.1% in December, as measured by the government's consumer price index (CPI), already seized on some with a gleeful "it's not as bad as expected". But that cut no ice with the Times.

The better indicator, the Retail Price Index (RPI), which includes housing, is already falling into dangerous negative territory. It's at a scary 0.1% last month from December's 0.9%. 

And that will send a cold chill down the spine of those whose pay rises, pensions and savings are directly linked to the realistic RPI. 

The fall raises the spectre of deflation which will become negative this year. But the government continues to bury its head in the sand, preferring its own CPI which  kept them in good stead during the boom years. 

Deflation is the killer punch for any economy. Any hope of a boost by increasing consumer spending, is either short-lived or just doesn't happen. People shop around frantically looking for the cheapest deals and put off spending, preferring instead to try to clear a mountain of debt. 

The CPI is a neat little device used to set inflation. It works by carefully selecting what government wants to measure and then a cunning weighting is dropped in to make those final tweaks and adjustments.

Inflation used to be measured by the retail price index (RPI) but New Labour ditched that in 2003.

The CPI is a less effective measure of price falls than the old RPI, but it's much easier to manipulate. But even the spin cannot hide the downwards spiral. 

As the government and Bank of England run out of magic bullets for the economy, the next step has to be to print money, lovingly disguised as 'quantitative easing' and a barrow full of banknotes. 

It's clear the government hasn't a cat in hell's chance of funding its ridiculous borrowing binge but printing money is fraught with long-term dangers.

Brown has steadfastly buried his head in the sand, refusing to shoulder any blame for the current economic disaster. The Orange Party has warned time and again the government is in denial about the dire state of the economy. 

There are realistic ways out of the depression recession, apart from massive government borrowing and reckless spending and printing cash but that would mean the government would have to own up to past mistakes and stop believing in its own spin.

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Brown's Labour Isn't Working

People struggling in the real economy took another battering today as unemployment is set to hit the two million mark by Christmas. There's little hope for anyone on the horizon, apart from the banks, as experts warn the devastating impact is only just beginning.

The number of people "out of work" rose by another 164,000 between June and August, to 1.79 million, according to government figures, the biggest rise since 1991.

This is despite the best efforts of the government to manipulate the easy target of unemployment figures and mask the true number of people not working who do not claim benefit.

Unemployment is now set to climb above two million by Christmas. Some forecasts put it at three million the year after. 

Even New Labour union sympathiser, Brendan Barber from Unite, reckons, "There can be no assumption that the people who are losing their jobs will find it easy to get new ones."

Today's figures come as inflation soared to a record 15 year high of 5.2 per cent, even using the government's discredited CPI index, following sharp rises in fuel and food prices.

After leading the way with the £500 billion bank bail-out and pseudo-nationalisation, experts predict the UK will now "lead the way" into world-wide recession.

Meanwhile, Brown is having praise heaped upon him from money-men around the world, as they rushed to join him and throw two trillion pounds of taxpayers cash and unrealistic borrowing to prop up the world economy, according to the Daily Telegraph. 

But there's little praise in the real world of the real economy, where people are worried sick about losing their jobs, getting work, facing crippling food and fuel bills, while trying to make ends meet struggling with spiralling debt.

Cameron's Conservatives and Salmond's SNP are right to attack the government's past economic record, creating the false boom and then the real gloom of the real economy, which directly affects people's lives. LibDem, Vince Cable, would do well to do likewise or face being labelled Mr "Has Been".

There are few words of comfort from Brown, who said the government would do "all it could to create work and help people maintain their jobs. Unemployment and redundancies are something that we wish to avoid wherever possible." 

Brown should get out into the real economy and the real world a little more often instead of coming out with the same tired old platitudes.

The Saatchi Tory Party 'Labour isn’t working' poster, which helped the downfall of Callaghan and the rise of Thatcher in the 1979 election, came at a time when unemployment stood at a paltry 1.4 million. Those were the days. How times change.

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Quick, Slip In Another Climb-Down

42 days, secret inquests and Sats. The climb-downs are coming thick and fast along with soaring inflation. With ministers thinking they're on a roll after Brown bankrolled the banks, it's a good time to bury bad news for the government but good news for schoolkids and civil liberties.

After the Lords booted out 42 days detention, Brown couldn't risk sticking to his guns nor could he lose face and throw in the towel. So up popped home secretary, Jacqui Smith, with the odd 'bill but no bill' solution. Totally bizarre - but Brown fudge won the day. 

Then the government dropped plans, in the same counter-terrorism bill, to order inquests to be held in private using the old chestnut of "on the grounds of national security."

The Oxfordshire coroner was clearly getting up the nose of the government as time and again he publicly blasted the MoD and ministers for equipment failures during inquests into Iraq and Afghanistan troop deaths. 

The solution was simple - just keep them all secret then no one would be any the wiser. 

42 days and the secret inquests have bitten the dust for now. But neither will go away for good. Popping the champagne is too early. It should be put on ice, which is what's happening with these deeply unpopular measures.

42 days will return in some form or other when the government feels there is a politically less risky climate. Another bill is already in the pipeline. There are plans to include those secret inquests in a bill on coroners reforms.

Now, instead of scrapping himself, schools minister, Ed Balls, is to scrap Sats tests for 14 year-olds in England, following this summer's marking shambles.

All this on a day where, back in the real economy, inflation today hit home above the 5% mark, even using the government's own manipulated CPI figures.

What next to get buried in the dust?  How about ID cards? 

The government was playing politics with people's civil liberties the first time round and is just doing it again. Burdening children with a testing culture was playing with young people's minds. Masking the true rise in inflation, is playing with the effect on the real economy 

As has been observed elsewhere, it's all leaving a nasty taste. 

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Meanwhile, Back In The Real Economy...

Brown's big bank bail-out came down with a bump today as, back in the real world, inflation hit home at above the 5% mark. Bailing out banks with taxpayers cash keeps the stock market happy but people are asking, what's in it for us? For the moment, not a lot. 

As the focus switches to the fall-out from the bank bail-out, even the government's much loved and discredited Consumer Price Index (CIP) is now weighing in at a hefty 5.2%, up from 4.7% in August. Now the highest in 15 years.

A better indicator, the Retail Price Index (RPI), ditched by New Labour in 2003, was already at 5% last month. 

The CPI may be a less effective measure of price rises than the old RPI, but it's much easier to manipulate. But even the spin can't halt the upwards march.

Even these official figures mask what's happening in the real world and tell people what they know already. Food prices and, in particular those obscene gas and electricity bills, are going through the roof, while Brown borrows billions of pounds to pop up the banks and get us all deeper in debt. 

The UK's annual rate of inflation rose to 4.4% in July, up from 3.8% in June, as measured by the CPI. That was the biggest monthly change in the annual CPI rate since records began in 1997. And it's just getting worse. 

The annual rate of inflation for energy and other household bills has now reached 15%.

It will be this real economy of jobs, inflation, mortgages, small businesses and meagre wage rises which will determine Brown and the government's future.

The recriminations have already begun. Cameron and the Conservatives have started to focus on that real economy and at the same time hit home on the decade of Brown's incompetence and the false boom years which got us in this mess in the first place. 

Voters have short memories. Brown's bounce will be short-lived. It is inflation, unemployment and spiralling debt, trying to make ends meet, which is the bogyman for the government, not the banks. After the boom, the gloom.

The nitty gritty of life determines the success of governments and whether they survive, not hugely expensive quick fixes for the City.

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Inflation 'Spinning' Out Of Control

The government's own official and well-spun inflation figure is hitting 4.4%, craftily masking the true rise. Things must be really getting bad for the economy.

The UK's annual rate of inflation rose to 4.4% in July, up from 3.8% in June, as measured by the government's consumer price index (CPI).

The CPI is a neat little device used to set inflation at whatever the government wants it to be - usually around 3%.

It works by taking anything that's a huge inflation buster out of the equation - and then, a cunning weighting is dropped in to make those final tweaks and adjustments.

CPI inflation figures are kept artificially low by the government, because they fix public-sector pay rises, regardless of the obvious huge hike in food and fuel bills. 

Inflation used to be measured by the retail price index (RPI) - but New Labour ditched that in 2003.

The CPI may be a less effective measure of price rises than the old RPI, but it's much easier to manipulate. A point made repeatedly by the Conservatives.

The jump in inflation from 3.8% to 4.4% was the biggest monthly change in the annual CPI rate since records began in 1997.

More holiday reading for beleaguered Brown and his doomed chancellor, Alistair Darling. 

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