Mar 24, 2015
Ed Miliband is expected to propose a new tax on tobacco companies – possibly levied according to market share – in his Labour Party conference speech to help fund greater spending on the National Health Service. Fair enough, you might say. The tobacco companies cost the NHS, and therefore the public purse, an awful lot of money. Wrong. I know this because I once heard it from the mouth of Professor Sir Richard Doll, no less, the man whose research originally proved the link between smoking and lung cancer. Many years ago, I happened to be at a lunch he was hosting for some particularly passionate representatives of ASH (Action on Smoking and Health). I was a smoker at the time, so kept pretty quiet, I can tell you, not for fear of upsetting them by defending the individual’s right to smoke, but for worry that they might smell the nicotine on my breath. In any case, they bored for America on all the sins of tobacco, including its alleged cost to the public purse in treating the various health conditions associated with smoking. Actually that’s not the case, piped up Professor Doll. “Tobacco smokers will on average have reduced life expectancy, and are quite likely to die before they become a burden on the state and the rest of society. What’s more they tend to die quite quickly, so their medical costs are not off the scale, compared with keeping, say, an eighty year old alive. The economy will have had the benefit of their productive life, but few of the costs of their inactive ones”. This explanation...
Mar 14, 2015
Standard & Poor’s has issued an extraordinary credit alert on the eurozone, one that deserves close attention. It warns that the rise of Germany’s AfD anti-euro party calls into question the euro bail-out machinery and queries the pitch for any form of QE, stimulus that has already been pocketed and spent in advance by the markets. It will force Angela Merkel to take a tougher line on Europe, and further complicates the management of the (already dysfunctional) currency bloc. The rating agency said it will henceforth monitor any sign that Germany is digging in its heels on EMU matters as it seeks to head off this rising political threat. The report is written by Moritz Kraemer, head of sovereign ratings in Europe. He is German. This is not an Anglo-Saxon analysis. Alternative für Deutschland is blowing across Germany like a tornado. The party won 12.6pc in Brandenburg and 10.6pc in Thuringia a week ago, following its success in Saxony. It has now broken into three regional parliaments. The free market FDP is being systematically destroyed. Now AfD is ripping into the Left-wing base of Die Linke as well. They have seven seats in the European Parliament. We saw potent effects of that yesterday as party leader Bernd Lucke personally grilled the ECB’s Mario Draghi at a session of the economic and monetary affairs committee. He specifically attacked ECB plans for asset purchases, insisting that there is already more than enough liquidity in the financial system to head off deflation. QE-lite is merely a way to shift credit risk from the high-debt states to the creditor core (a quasi fiscal...
Mar 4, 2015
As I point out repeatedly, the debate about EU migration and free movement has two separate, but related, dimensions: “fairness” – who can access what benefits and when; and “volume” – how many migrants come to the UK every year. So far, David Cameron has been sticking to fairness, seeking to change the EU rules on both out of work benefits such as job-seekers allowance, and in-work benefits such as tax credits. In my view, this is the right focus. EU free movement is a net benefit to the UK but also comes with challenges, in particular to certain sectors of society such as the low-paid. In order for it to stand in face of increasing pressure, governments need to be able to demonstrate to citizens that they have control over their welfare systems and that public policies to get people from welfare into work, such as tax credits, can be targeted at those who need them most. Bringing back such control will go a long way to address people’s concern about immigration. There is also support in other EU countries for these changes, and it wouldn’t require EU Treaty change, so it’s achievable. However, with Ukip breathing down his neck and a by-election nigh, Cameron is reportedly now thinking about going further, potentially curbing the volume of EU migrants. This is very tricky territory. It is currently unclear what exactly – if anything – Cameron might ask for on volume ahead of that potential 2017 EU referendum, but he may have three broad options, which in order of increasing difficulty to secure EU agreement are: An “emergency brake”...
