All Hands On Deck

MORNING BRIEFING – By Benedict Brogan (Daily Telegraph).

David Cameron has a big day ahead of him. He will no doubt face a grilling at PMQs after the IMF chief Christine Lagarde threw his economic plan into doubt. She endorsed the Government’s action on the deficit but said more was now needed.

The papers are split on their diagnosis: the Times (£) and the Guardian have splashed on“IMF tells Osborne: it’s time for Plan B”, while the Mailhighlights the OECD’s praise for holding its nerve on the austerity drive.

Ms Lagarde actually took a relatively sensitive line, as Jeremy Warner points out, urging the UK to implement aggressive policies to boost demand in monetary policy and in the grey area between monetary and fiscal policy, while still leaving the fiscal stimulus option on the shelf if these do not work.

Although she said explicitly that “further monetary easing is required” there should be more quantitative easing and a cut in the 0.5 per cent interest rate, the key line which will reassure the Treasury was when Ms Lagarde described how she “shivered” at the prospect of Britain’s 2010 deficit not being controlled.

Both George Osborne and Ed Balls seem pleased with her judgment. George welcomed the statement that “reducing the high structural deficit remains essential” and the pace of consolidation was “appropriate”, while Mr Balls said that “the IMF is right to call for action to boost the British economy and to stop slow growth“.

ECONOMIC CLEGG UP?

At least Nick Clegg has been a bit more decisive, giving an interview in the FT (£), saying that the Coalition is preparing a “massive” increase in state-backed investment in housing and infrastructure.

He borders on admitting that Britain is tired of austerity, but he suggests that after two years of “lurid” warnings on the deficit, it’s time for a message of optimism, saying:

“That kind of language over a prolonged period of time can have a dampening effect on mood, which is very important in an economy.”

The article also says:

“The stronger emphasis on growth was agreed by a handful of senior ministers in Downing St earlier this month, in a tacit recognition that François Hollande’s election as president of France had changed the terms of Europe’s economic debate. Mr Clegg said he personally welcomed the election of the French Socialist leader.”

If this is the case, this leaves Germany isolated on Greece as the FT (£) also reports that Germany has ruled out sharing the debt through common bonds.

BEECROFT IN DAVE’S BONNET

We’ve splashed on the public spat between Vince Cable and No 10 adviser Adrian Beecroft. Mr Beecroft told us in an interview that Mr Cable was a “socialist” who is “not fit for office”

He also reveals that he was not commissioned by Steve Hilton, and offered harsh words on the state of the Government:

“I’m constantly struck by how un-robust the Prime Minister and the Chancellor are when it comes to pushing back [against the Lib Dems]”

“Nick Clegg [is] always threatening to go nuclear and dissolve the whole thing if he doesn’t get his way with this, that and the other. Which you’d think actually must be a hollow threat. Therefore, why can’t the Government be more robust? I don’t know what the answer is. But it is disappointing.”

He also pours scorn on George Osborne, saying:

“I don’t see them as a driver of growth … I think they’re fixated, understandably under the circumstances, on raising money. But if you take the recent Budget, it’s probably a very sensible thing to put VAT on alterations to listed buildings.”

Read the full interview here.

VICTORY FOR VILLAINS

And Europe’s finally made us give prisoners the vote. The Sun, Mail and Express have all splashed on it in outrage, the Mail’s headline reading “Contempt for our democracy” .

Dave said the idea made him “physically sick” in November, and Dominic Grieve told EU judges it was a “political question” for national parliaments to decide.

Right-wingers David Davis, Priti Patel and Dominic Raab have made their disgust known. Read their views in the Sun’s report. The Government may find itself in a tricky spot if they don’t take action.

Mr Cameron will be urged for political reasons to ignore the doubts of his law officers and refuse to implement the decision.

Our leader column advises Mr Cameron:

“He can either pick a fight with his own party and try to ram through a Bill that will implement the Strasbourg ruling, a position that will not be understood in the country at large. Or he can tell the court that the UK Government is not prepared to accept this perverse ruling, and thereby reassert the rights of our own Parliament to make its own laws.”

And the Mail is also outraged by the secret justice bill that is due to be unveiled tomorrow or on Friday. It reports that the plans are still in turmoil just days before they are due to be realised, quoting government sources as saying, saying that the Tories and the Lib Dems are still wrangling over the details.

It give its whole leader column to the issue, making “a passionate plea to the Prime Minister to remember the sacrifices of our ancestors — and preserve the public inquest as the ultimate defence of our freedom, for which so many gave their lives.”

GAY’S THE WORD

And the Right-wing troubles don’t end there. Northern Ireland Secretary Owen Paterson broke ranks with the party line yesterday by writing a letter to a constituent, saying:

“Having considered this matter carefully, I am afraid I have come to the decision not to support gay marriage…”

Politics Home has a copy of the letter. Our reporthas more detail.

POLL WATCH

Latest YouGov/The Sun results: Labour lead on 11

Conservatives 32%, Labour 43%, Lib Dems 8%, UKIP 9%

Overall government approval rating: -35%

TWEETS AND TWITS

Lots like Harriet’s only keen on encouraging women when she agrees with them.

”@HarrietHarman: Dear god! Chloe Smith hopeless. On newsnight

Then again, she did momentarily confuse the deficit and the debt. Not great for a Treasury minister…

TOP COMMENT

In The Telegraph

Neil O’Brien: Bend the twig to shape the tree – that’s the key to social mobility

Richard Spencer: Egypt decides between army and mosque

Leader: Energy security is worth paying for

Leader: The prisoners dilemma

Best of the rest

Guido Westerwelle in the Times (£): Europe has the money to kickstart growth

Daily Mail leader: Coroners’ courts are your last defence against a tyrannical State. Is that why Cameron wants to make them secret?

Matthew Taylor in the Financial Times (£): Beecroft is a glimpse into coalition future

Martin Wolf in the Financial Times (£): A fragile Europe must change fast

THE AGENDA

Today: EU leaders meet in Brussels

9.30am: Retail sales figures for April are published by the Office for National Statistics

10am: Stephen Dorrell MP, Andrew Marr, Jeremy Paxman and Lord Reid to give evidence to the Leveson Inquiry. The Royal Courts of Justice, The Strand

10am: Boris Johnson at Mayor’s Question Time, City Hall, The Queen’s Walk

11.30am: International Development Questions

12pm: David Cameron at Prime Minister’s Question Time

12.30pm: David Cameron makes a statement to MPs on G8 and Nato summits. House of Commons

2.30pm: Ken Clarke appears before the Justice Select Committee. Grimond Room, Portcullis House

4.30pm: Tory backbencher Robert Halfon leads a debate on petrol and diesel prices, Westminster Hall

Debt crisis: Chancellor George Osborne rules out new Eurozone bailout

Speaking as finance ministers meet in Mexico for the G20 summit, the Chancellor said extra funds would not be handed over until countries who use the struggling single currency commit resources themselves.

In an interview with Sky News, Mr Osborne said: “We are prepared to consider IMF resources but only once we see colour of eurozone money and we have not seen this.

“While at this G20 conference there are a lot of things to discuss, I don’t think you’re going to see any extra resources committed here because eurozone countries have not committed additional resources themselves, and I think that quid pro quo will be clearly established here in Mexico City.”

The Chancellor also refused to reveal if he would be increasing the personal tax allowance to £10,000 at next month’s Budget.

“Any tax cut would have to be paid for … what we are not going to do in the Budget is borrow any more money to either increase spending or cut taxes,” Mr Osborne said.

Read more….

Democracy and transparency remain the biggest victims of the euro crisis

The 80,000 Greeks that came out in Athens yesterday to protest the latest round of bailout austerity imposed by EU-ECB-IMF troika can shout all they want. They can even express their disgust at the polling booths in the country’s general elections, scheduled for April. It won’t make much difference. To get its second bailout, the leaders of Greece’s main political parties are required to submit a written commitment to fully implement the package regardless of who wins the elections in April.

Read more….

Davos 2012: Can the Germans stop being German?

One of Davos’s more amusing characteristics is that it can be used as a quite reliable contrary indicator. I’ve been coming to this annual gathering of the world elite of finance, business and public policy for some years now, and you can set your watch by it. If the mood is buoyant, you know that disaster is just around the corner, and if it is intensely gloomy, that things will soon be picking up. En masse, bankers, economists and business leaders tend to be a very poor form of economic indicator. Sometimes they are so wrong that one wonders how they manage to stay in business.

In any case, I take some heart from the feeling of resigned despair which is the prevalent mood this time around, at least among Western participants. It probably means that economic prospects can’t be quite as bad as everyone thinks.

It’s easy to mock, and to be fair, the range of views on offer at Davos this year is more multi-layered than usual. A sizeable constituency takes the view that recent action by the European Central Bank has succeeded in easing credit conditions and providing some limited economic support.

All the same, the over-arching prognosis is that without urgent action, the eurozone debt crisis will end up destroying us all. Already, much of Europe is slipping back into recession.

Read more….