Osborne 1 IMF 0

After all the fuss the International Monetary Fund has made over the past month about the need for the UK to change course on austerity, about how George Osborne’s policies are “playing with fire”, one might have expected a harsh verdict from the Fund in its annual survey of the UK today.
In reality, the report is far less stern on the Chancellor than many had anticipated. Yes, there’s plenty of verbiage about the problems facing the economy: about the fact that growth has disappointed, that per capita income is still 6% below the pre-crisis peak, that risks facing the economy remain significant, and that the financial system remains in poor health.
However, the critical parts of the document – those that deal with the Chancellor’s fiscal plans – are far more measured, far less critical, than the Fund’s previous comments might have indicated.
For one thing, the report seems far more focused on slight shifts to the timing of various spending measures (bringing forward capital investment) rather than recommending a massive spending blitz. Rather than saying that Mr Osborne should replace his plans with an alternative, it says he should consider “Further modifying the composition of consolidation to boost growth”. It mentions a couple of possible options on this front: “reducing marginal effective corporate tax rates” or “introducing tax allowances for raising equity”. However, crucially it mentions that these should be offset by higher taxes on property and more VAT-raising measures.
In other words, the report itself doesn’t call for a significant further fiscal stimulus beyond what the Chancellor has already committed to: it is more a case of rearranging the deck of cards rather than throwing it out entirely.
This is not to say that everything the report has to say on UK economic policy is positive – or without interesting recommendations: it warns that under Help To Buy – the Chancellor’s controversial mortgage guarantee scheme, “there is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing.” It suggests that the Bank of England should consider giving more forward guidance on interest rates and should regulate loan-to-value ratios – something it has stopped short of so far.
However, many of the more radical recommendations some had speculated would be in – that Osborne should switch to a plan B with more discretionary fiscal stimulus; that the Government should sell off its stakes in the nationalised banks as soon as possible – simply haven’t turned up.
That this is the case is a testament largely to an aggressive behind-the-scenes lobbying operation by the Treasury to try to persuade the Fund’s analysts, who have been in the country for the past fortnight, that they have underestimated the growth-friendly elements of Osborne’s plan. The Chancellor will be delighted that after the criticism he faced in Washington last month, the Fund has quietly toned down its critical stance.

Public finance update (for normal people)

Last month I wrote a lengthy piece about the disturbingly complex state of the public finances. Well, the latest month’s numbers – those for April – have come in.

The good news for the Chancellor is that they are a touch better than expected. The bad news for the rest of us is that they are no less complex. In fact, the size of the public finance report itself – the official document with all the numbers – has continued to swell. It’s now at 55 pages – a 60% increase compared with last year – and is increasing in size by a page a month.

However, there are some interesting lines in there – not merely in the most recent month’s deficit, which at £6.3bn was a couple of billion pounds lower than expected – but also for the previous fiscal year, 2012/13, which has been revised as more new data has come in on public spending. Remember that the Chancellor made great political hay of the fact that he was going to borrow less in 2012/13 than the previous year. Well, here’s where he now stands on the range of different borrowing measures we now have.

1. PSNB: Public sector net borrowing – the traditional measure of the deficit. On this measure, the deficit is down this past financial year (12/13) by £19.1bn (or 20.5%) to £74.2bn.
2. PSNBx: Stripped of the effects of financial interventions (eg the semi-nationalisation of banks like RBS and HBOS) the deficit was £85.1bn – down by 29.6% on the previous year (last month the figures put the decrease at 28.7%).
3. PSNB ex RMPP: Strip out the impact of the Royal Mail Pension Plan, which has been added to the Government’s books, and the deficit was £113.1 – down by 6.5% (last month had it down by 5.6%)
4. PSNB ex RMPP and APF – stripping out the effect of the extra money funnelled into the public finances from the Bank of England’s Asset Purchase Facility (eg profits from quantitative easing): deficit of £119.5bn – down 1.2% on the previous year (was previously a mere 0.3% fall).
5. PSNB ex SLS – this is a variant of the deficit which, on top of all of the above excludes the influx of profits from the Special Liquidity Scheme. On this measure, the deficit was 900m higher in 2012/13 than the previous year (that is at least a smaller increase than the £2bn quoted last month).

The Jawbone Up and me

After a week or so wearing the Jawbone Up I suddenly realised I had started to develop some rather unusual habits. For one thing, I’d taken to swinging my arms rather more than usual when I walked. If I had a bag to carry I’d put it in my left hand so my right hand could swing all the more freely. That odd man walking around Maida Vale with carrying an inordinate number of carrier bags in his left hand, swinging his right arm wildly, yes, that was me.

I also seemed to be waking up slightly earlier than usual and waiting, slightly paranoid, for the wristband’s alarm function to start vibrating, my drowsy brain trying to work out what kind of movements would persuade it that it was time to rouse me.

I’m pretty sure these aren’t the kinds of habits the Up is supposed to inspire. Indeed, as part of the new and growing fad of wearable tech, the Up’s tagline is “Know yourself, Live Better”: the objective is to nudge you into living healthier, sleeping better.

Essentially (and I’m sure the people at Jawbone, who kindly sent me one to look at, don’t put it quite like this), the Up is a glorified pedometer. You wear it on your wrist; it measures the number of paces you take; when you sleep it measures how much you’re moving around; and in the morning it wakes you up during a pre-determined timeslot, detecting from your movements when you’re in light, rather than deep, sleep.

Every now and then you plug the thing into the earphone socket of your smartphone and it syncs up with it, telling you how much you’re sleeping and how many paces you’re taking. Apparently since I started using it three weeks ago I’ve covered 127km and slept 123 hours.

What I’m not quite sure of yet is what to do with that information. I don’t think I’m taking any more exercise than I was beforehand, nor am I sleeping any longer. From my perspective the main advantage of the Up is having an alarm clock that wakes me without making too much noise. The problem is that occasionally it seems to misfire, vibrating at random moments rather than when I expect it to go off – which I guess is why I’ve been waking up early, wondering whether it’s about to go off, or whether it’s having another mercurial day.

Having said all of that, I am still wearing the Up today, and see little harm in wearing it in the future. The problem is that it doesn’t really do as much as I’d like it to do. For instance, I’d rather like to have a wearable device with GPS so I can take it on runs and get genuine tracking of pace/distance etc without having to carry my phone with me. I’d like something which measures heart rate and temperature, both body and environmental. Happily I think those kinds of sensors aren’t all that far away. The Basis, for instance, is a watch with a heart rate monitor and all kinds of sensors that measure stuff like that.

As John Lanchester writes in the latest London Review of Books, the apotheosis of this is the Google Glass, a pair of glasses with a camera, primitive computer and display built in. One of his key concerns is the fact that you can record videos of people without them. I’m less worried about this (I’m sure if society has a problem with this then pretty soon governments or regulators will shame Google into installing a light that makes it pretty obvious you’re recording anything), and more interested in the potential for exercise.

For instance, I’d rather like to have a heads-up display showing me how far I’ve run. If I could hook the Glass up to an external camera it could make for an excellent rear-view mirror when I’m cycling (I currently use a Reevu helmet for this but it’s inexplicably been discontinued).

The problem, and there’s no getting away from this, is that by any standards you look like an awful geek when wearing Google Glass. Just, really, really sad. I’m sure in the fullness of time we’ll become inured to them, but then they probably said that about Bluetooth headsets too.

A quick rant about the unemployment figures

This might sound counter-intuitive, given everyone (the ONS included) is proclaiming that today’s labour market data showed a rise in unemployment, but the reality is that the jobless total actually dropped A LOT in the most recent month. In fact, unemployment fell in March by 202,000 – the fifth biggest one-month fall since 1995.

It’s now at 2.37 million, compared with 2.57m in February. The unemployment rate is down from 8% to 7.4%.

You might have realised by now that these figures bear little relation to the numbers being reported elsewhere this morning, which show the unemployment rate at 7.8% and the number up by 15,000 to 2.52 million.

This is because those figures – the ones the ONS quotes and everyone else follows suit – are an average over three months rather than one month on its own. That’s fine and makes plenty of sense. However it’s telling a story that’s effectively out of date: yes, if you compare unemployment in the final quarter of 2012 with unemployment in the first quarter of 2013 (as the ONS is doing) then it’s a touch higher. But that’s to ignore the fact that in the most recent month the labour market has been improving, not deteriorating.

If you compare the (three month period Jan-Mar) figure the ONS quotes in its release today – 2.52 million – to the the three-month period it cited in last month’s release, Dec-Feb, it is also lower – by around 45,000. Come to mention it, it’s only a few thousand above where it was in Nov-Jan. In other words there is no doubt that the direction of travel this latest month, compared with last month, is down. Why the ONS has to confuse us by giving the impression that unemployment is on the rise is beyond me.

There we are. Hope that’s clear. Rant over.