UK Steel crisis rumbles on, with 40k jobs on the line

Indian steel giant Tata's plans to sell off its British assets has sent shock waves through an already-turbulent British Steel industry.

A staggering 40k jobs could be lost, if no one is willing to buy Tata's assets. To put this into perspective, imagine Wembley Stadium being at full capacity, and then someone telling about half the crowd that they're being laid off.

If private investors refuse to buy the assets, there's always the chance that the government could step in, and perform an interventionist manoeuvre, otherwise known as nationalisation.

However, when asked about the Steel crisis, the Prime Minister told Sky News earlier today: "I don't believe nationalisation is the right answer".

Readers might recall how the government bailed out and nationalised a handful of British banks, including RBS and HBOS. It's an easy comparison to make, surely?

Twitter user Primly Stable added some perspective to the nationalisation debate, after some users tried to compare the steel industry to the banking sector, during the 2008 crisis.

Source: @PrimlyStable (Twitter)

Labour leader Jeremy Corbyn strongly urges that Parliament be re-called, to debate the issue, given the number of peoples' careers being at stake.

Primly Stable added some further commentary on Jeremy Corbyn's position.

Source: @PrimlyStable (Twitter)

An e-petition for Parliament to be re-called has rapidly gained traction. Late last night, it had only attracted about 7k signatures, but this has since swollen to well over the 100k level (116.5k as of Thursday 31st March). 

Now this number of signatures has been reached, MPs are compelled to debate the issue, at a forthcoming session in the House of Commons.

It's a slightly confusing strategy; MPs, owing to sheer public pressure, will probably want to raise the issue regardless. 

Organising for a debate about re-calling Parliament, to talk about the steel crisis, when MPs will be doing it anyway makes the whole thing seem well-intentioned but some might say it's a little bit pointless. Debating is a pretty vital part of an MP's job.

Fraying nerves of Steel

Signs of trouble for British Steel were already apparent back in late 2015, when Chinese President Xi Jinping visited the UK. The visit was made awkward, when some started to accuse China of dumping massive amounts of Steel into European markets.

As any economics professor will tell you, when the quantity of a commodity (e.g. Crude Oil) increases, the overall value of the commodity (e.g. each barrel of Oil) diminishes. The same applies for steel.

As China's industrial boom starts to slow, and the economy rebalances towards domestic consumption, the glut in industrial materials it produces are starting to find new homes on stranger shores.

As shown below, the value of a metic ton of steel has been see-sawing, since the global financial crisis. It's been especially downbeat since it peaked in 2015, at 500 USD per MT. It has since tumbled all the way down to just 90 USD per MT.

It's even worse, when you consider that Steel prices were at a lofty 1265 USD per MT back in 2008. This crash in commodity prices in general is, in large part, responsible for the wave of deflation we've seen, particularly in Western economies.

Vote Leave's dossier of EU's 50 dodgiest people (EU Referendum latest)

Photo by Danny Howard (Flickr) / CC BY

Project Fear moves in mysterious ways. Sometimes, it's dubbed a tactic of the Vote Stay campaign. Now it seems to have switched sides for a change.

Vote Leave decided to publish a dossier today, detailing 50 EU nationals with a criminal history, who were able to enter the UK, thanks to the EU's free movement principle.

One of the criminals listed is Arnis Zalkalns, the man suspected of having murdered Ealing schoolgirl Alice Gross, back in late 2014. Alice was last seen, walking by a West London canal, during the summer holidays. Her body was later found, hidden in the canal.

Zalkalns vanished for a time, but was declared dead, after remains were eventually found in a park, and his death was treated as a suspected suicide.

Vote Leave's controversial move has prompted some ridicule from its critics. Comedian David Schneider took to Twitter, to summarise the bafflement many felt with the dossier.

This is just the latest tactic, as part of the Brexit campaign's version of Project Fear. It's official; the campaign is stuck in negative point-scoring mode now.

A slew of polls since mid-March has indicated that the public are narrowly verging towards supporting continued EU membership, according to Ipsos Mori, ICM, ComRes and YouGov.

This sort of outcome would be probably the most awkward one for the Prime Minister. The Pro-In/Brexit factions within the Conservative Party is already starting to lose patience with one another.

There is a tangible sense that the Prime Minister's position is threatened, whatever the outcome of the referendum, whether it comes in the form of his obvious opponents, across from the dispatch box, or amongst his own party's rebellious backbenchers.

If a Brexit just pips it to the top and takes place, Mr Cameron will likely face calls to resign, particularly from the opposition, for being the Prime Minister who took us out of the EU. 

In this scenario, the Conservative Party's Brexit wing, lapping up the victory, would demand a more representative face in charge.

On the occasion of a narrow win for staying in, Brexit Conservatives will feel humiliated and lash out at the Prime Minister for not supporting their side. 

However wide or narrow the margin, a loss for the Brexiters would be a monumental blow; a decisive failure to win what's been a generation-long battle for supremacy.

Fallout from Budget 2016: Omnishambles 2.0?

History has repeated itself for the beleaguered Chancellor this spring. 2012 marked a low point in the coalition government's fortunes, but a new looming threat is approaching, post-haste.

Photo by Lies Thru a Lens / CC BY

In a move that pundits were quick to call the "IDS of March" (scraping the barrel, I know), the Cabinet lost its Secretary for Work and Pensions, Iain Duncan Smith, after 6yrs in the job.

Proposed cuts to disability benefits were eventually scrapped, but the muddle following last Wednesday's Budget prompted ex-Conservative leader IDS to reconsider his role, it's understood.

To avid EU referendum watchers, IDS is one of the most prominent Eurosceptics in the Conservative Party, and so his resignation is undoubtedly being viewed through this lens.

IDS did the rounds of several televised interviews over the weekend, following his decision. The Mail on Sunday reported that Mr Cameron allegedly "exploded with rage" at IDS's news, and it was also alleged he called him "dishonourable", but it remains unclear how this information was ascertained.

In an interview on the Andrew Marr Show, IDS took a swipe at the now-scrapped proposals, branding them "deeply unfair", as well as accusing the government of moving to please Tory-supporters of pensionable age or over, at the expense of the poorest in society.

IDS also insisted his decision was unrelated to the upcoming EU referendum, but his charged language implies some kind of crafty game-plan to potentially shape public opinion, in an atmosphere where the slightest spark could ignite sufficient support for either side of the campaign.

The resignation is perhaps the first outburst of dissent, in a governing party that is on the brink of a major skirmish. The Conservative Party was left scarred in the early 1990s, over the Maastricht Treaty, and suffered something akin to a "lost decade" in the wilderness, before recovering in the run up to the 2010 election.

Just as the Scottish referendum has not healed wounds over the desire for some in Scotland to move towards a more independent nation, the EU referendum is unlikely to heal the Conservative Party's schism. In fact, it might trigger a new leadership election, if reports are to be believed.

The Sunday Times spoke to an un-named minister, who claimed the Prime Minister "wants to fix the problem. He wants to get rid of the t***s who have caused all the problems. There will be a reckoning.”

Only 50 MPs are required to call for a leadership race, and there is a possibility a Brexit candidate might challenge Mr Cameron, and even dismount him, before his second and final term is over. In the run-up to the 2015 election, Mr Cameron had told James Landale from the BBC that "Two are wonderful, three might just be too many".

The 2016 Budget (plus economic round-up)

Glimmers of sunshine on budget day, but the clouds have gathered since November's Autumn Statement.

Photo: HM Treasury (Flickr) / CC BY

The March 2016 budge has been and gone. GDP growth forecasts have been downgraded, the deficit will persist longer than the Chancellor expected, and the debt-to-GDP ratio has still not peaked yet.

George Osborne set out as Chancellor all the way back in June 2010's "emergency" budget to rescue the British economy from a Greek-style debt crisis selloff of government bonds.

He set himself three golden rules, for people to judge his performance.

1.) He hoped to cap welfare spending over the 2010-15 Parliament. He failed.

2.) He hoped to get the debt-to-GDP ratio falling. He's still not achieved this yet.

3.) He hoped to achieve a budget surplus by the end of the Parliament. That was supposed to happen in 2015. Now it's been extended out, to the 2019-20 financial year. Let's see how that goes.

As it stands, he hasn't quite lived up to his own standards. If he fails to achieve a budget surplus by 2020, Mr Osborne's alleged aspirations for higher office will be blown out of the water.

There were some rays of sunshine, amidst the rhetoric and barrage of statistics yesterday. The ONS announced that unemployment remained at a 10yr low of 5.1%, whilst average earnings rose to 2.2% in January (well ahead of inflation). The so-called feel-good factor of real wage growth remains in place, for now at least.

Wage growth since the financial crisis. Is the recent recovery too little too late?

Source: ONS/Timetric

If the feel-good factor is supposedly upon us, why was the budget so gloomy?

Simple: the economic growth and productivity gains which the Office of Budget Responsibility (OBR) pencilled in, back in 2010, failed to materialise. The government's having to cut further into the welfare state to balance the books.

Government ministers are often heard justifying the cuts to public spending, by using the analogy of a spendthrift household. The idea is that you must live within your means, or you max out the credit card, and no one will lend to you.

Except the UK government isn't a household. A household in work can get a rough idea how much it can earn in a year, to keep things running smoothly. The Treasury can only guess at how much tax revenue it can generate.

Spending plans are all very well, but if productivity is weak, wages fail to take off. Wages help fill the coffers, and if they're subdued tax receipts will lower. The cuts will be made, but the tax base will be too low for the cuts to be enough to balance the books.

The gap is forecast to close, but it'll come half a decade late than originally planned

Source: OBR

Speaking to me before Mr Osborne announced the OBR's economic forecasts at the dispatch box, economist David Blanchflower told me he expected growth to be "downgraded but still too optimistic".

As it turned out, economic growth will be fairly steady. We were told to expect average growth of 2.1% a year by 2020. It's slightly below the "long-run" growth rate economists use to talk about, of about 2.7%.

The forecasts predicted that unemployment would bottom out and rise slightly, to 5.3% by 2020. This would imply that the surge in job creation over the last 4yrs will peter out somewhat, despite the steadily-growing economy.

In other words, we are being told to expect future growth to be the result of higher productivity, as opposed to an increase in the supply of labour.

US Federal Reserve and Bank of England refrain from rate hikes

This is news that came in two parts, during the day. The Federal Reserve announced it intended to avoid hiking rates in March. The Fed notoriously hiked rates back in December 2015, and chaos ensued. 

Now the Bank of England has announced rates will remain at 7yr lows. The OBR's forecasts implies rates might get cut below 0.5% in the next two years, if conditions continue to deteriorate deteriorate

Japan's central bank cut interests rates into negative territory, and the ECB followed suit. It cut its deposit rate even further into negative territory this month. Global stock markets tumbled earlier this year, over fears negative rates will hit the margins of financial institutions.

The current so-called emerging market crisis is easily explained. When the Fed electronically created billions of Dollars, over three sucessive rounds of QE, they were able to keep a lid on the Dollar. Commodities like Oil, Gold and Silver rocketed until 2011.

When new Fed chair Janet Yellen announced a taper of QE in 2013, emerging market currencies peaked, and began to tumble, and commodities along with them, as the Dollar began to rally.

Even the hint of a rate hike, plus a slowing Chinese economy has sent Oil prices down to 12yr lows.

Who's afraid of Project Fear?

Photo by Bantosh / CC BY

Project Fear: Downing St pictures presents a campaign of terror unlike anything you've seen before. Quake in fear, as the government tries to persuade you that jobs could be lost, if we leave the EU.

Watch goggle-eyed, cramming popcorn into your mouth hurriedly, as business after business warns about how the Pound might tumble if we decide to go it alone.

Coming to a cinema near you, in June 2016. (Warning: contains scenes of politicians strongly disagreeing and calling each other names)

In the run up to the EU referendum, due to take place on 23rd June, the Out campaign has been trying to forge a coherent us-versus-them narrative, which it hopes will show how nasty the In campaign is. Except the Out campaign is running its own Project Fear.

This article will concern the purely EU-related aspect of the campaign. The Tory infighting aspect, which is a story in and of itself, will be covered in a forthcoming article.

Just two weeks ago, former Tory leader Iain Duncan Smith or 'IDS', (Welfare and Pensions secretary) claimed that remaining in the EU greatly increased the likelihood of a Paris-style attack.

The comments come at a time when Ipsos Mori reports that terrorism is one the top 10 concerns facing Britons today. IDS is trying to appeal to the general public's fears of a terrorist attack, which hasn't even happened yet.

The argument has a logical gap. Terrorism is the problem, and so he thinks the solution is quitting the EU, above all. It seems like something of a leap, and says more about his personal views, than about how to actually tackle terrorism. IDS needs to elaborate on this further, if it is to be taken seriously.

Michael Gove, another Brexit supporter, is reported as saying that the far right has flared up to levels not seen since the 1930s, and that the dire straits of the economic crisis in Greece have seen "Hitler worshippers" such as Golden Dawn entering the Greek Parliament.

He added:
“Our security and sovereignty stand together. I believe that there are better opportunities to keep people safe if we are outside the European Union."

Mr Gove fails to state how a Brexit will actually halt the rise of the far right in places like Greece. His argument also fails to take note of the EU's origins. The European project emerged as an alternative way of conducting affairs in Europe, in reaction to the 1930s wave of fascism and terror.

Mr Gove is also not remembering recent British political history: the referendum is only taking place at all, because another political party, UKIP, were surging in the polls during the last parliament. UKIP is generally seen as a right-wing fringe that just won't sit comfortably within the Conservative benches.

Some might go as far as saying UKIP are far right, but the economic situation in the UK since 2008 has been drastically different to Greece's. Greek GDP has slumped but the UK has shuffled along, with average economic growth since 2010.

The rise of the far right is not EU-centric. The GOP in the US is being crippled by a lurch to the right which has been going on for many decades. This right-wing surge is also a phenomenon that goes far beyond the trivial pro-EU/anti-EU squabbles. Without a doubt, it will remain an issue for many years yet.

We'll never know what would have happened in the event of an EU-less Europe; it's the counter-factual. However, the 1920s and 1930s do serve as an example of how not to allow isolationism and nationalism to prevail following a bloody world war.

Quick fact to remember: the 2012 Nobel Peace Prize was awarded to the whole EU, as a sign of recognition for the achievements of the European project. Below is the Norweigan Nobel Committee's justification:

"The Nobel Peace Prize 2012 was awarded to European Union (EU) 'for over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe'."

The debate is all very well, but what do the polls say right now? YouGov released a tranche of polls over the past few weeks, the most recent of which show a lead for the In campaign. The betting markets are showing signs that bets are piling behind Britain remaining in the EU.

Based on these two sets of indicators, perhaps the biggest fear is coming from the Out campaign?Maybe they're starting to take notice of the way public opinion is forming, and they're panicking. Just saying that Brexit Britain will become a green and plesant land again isn't enough.

Now the Outers are saying fascism is on the rise, and that terrorism is more likely if we stay, but the causes and solutions aren't really obvious, if we just do a Brexit. They're structural social problems, and will take more than a referendum to fix.

Iain Dale certainly shows signs of referendum fatigue, and it's only March. He made the controversial decision today to compare a Brexit to Britain declaring war on Germany in 1939. Yep. Not the most pleasant juxaposition.

Source: Twitter (user @twlldun)