War breaks out over the £5bn

There appears to be a row developing over the spending plans of the coalition.

With yesterday's warning from the IMF over the risks of the economy slipping back into recession,various sources are leaking that there will be a £5bn increase in capital spending to help boost the economy.

The Treasury has rejected suggestions that George Osborne would change his economic strategy and this morning the Chief Secretary to the Treasury Danny Alexander has been rolled out to the media to confirm that the coalition will not be changing its spending plans.

They are an integral part of our deficit reduction plan he told the Today programme adding that

'This country has a great asset in clear spending plans that we are sticking to, and that is something we should not sacrifice'

However there is no smoke without fire with the BBC's Nick Robinson quite adamant that sources have told him that there are moves afoot to release the £5bn.

Odds on that the source is the Business Secretary?

One Tory who is definitely against a move is John Redwood.Writing on his blog he says spending an extra £5 billion is a stupid idea launching a tirade at the BBC whose economic correspondent

seemed unaware that the government has already tried the £5 billion capital boost, and the economy has slowed down markedly despite it. (Red Book page 93 Public sector gross investment) She seemed unaware that the government upped the spending figures in March, with so little favourable effect.

More notices from Redwood

I blogged about John Redwood's warning notice for shoppers on Saturday.

Well he is at it again and this time-well read it here

LIVING IN THE UK CAN DAMAGE YOUR WEALTHDRINKING WINE IN PRIVATE AT HOME WITH YOUR FAMILY IS A MIDDLE CLASS ACTIVITY WHICH MAY DAMAGE YOUR HEALTHTRYING TO ARREST A BURGLAR SHOWS YOU LACK SYMPATHY FOR THE FINANCIALLY AND MORALLY DEPRIVED AND MAY BE A CRIMINAL OFFENCESTERLING MAY GO DOWN A LOT AS WELL AS GO DOWNTHE GOVERNMENT RESERVES THE RIGHT TO PAY YOUR PENSION AND ANY DEBT REPAYMENTS IN DEVALUED POUNDSJUST BECAUSE THE GOVERNMENT BUYS BANKS SHARES DOES NOT NECESSARILY IMPLY THEY THINK THEY ARE CHEAPMINISTERS NEED AIR FLIGHTS AND OFFICIAL CARS TO HELP THEM GET OVER THE IMPORTANT MESSAGE THAT FLYING AND DRIVING CAN DAMAGE THE PLANETJOB SECURITY CAN ONLY APPLY TO THE PUBLIC SECTORPLEASE ENJOY THE CURRENT GOVERNMENT SHOW AS YOU WILL BE PAYING FOR IT LATER

Shopping can damage your health

I like this post from John Redwood who warns about the dangers of shopping

The government would like you to go shopping. They would prefer it if you flashed the plastic, as they want you to go borrowing as well.
I have a more modest suggestion. If you think at some point in the next year or two you cannot resist the temptation of an import of two, go and buy it today. If you cannot cure yourself of the craving for continental wine, have one last fling. If the curves of European furniture are keeping you awake at nights, go and treat yourself this weekend. If you still do not have enough amazing electrical and electronic gismos and TVs from Japan, this might be your last chance to afford one.

And he believes that shops should carry the following health warning

SHOPPING CAN DAMAGE YOUR WEALTH. YOU SHOULD NEVER BUY SOMETHING WITHOUT TAKING PROPER ADVICE FROM SOMEONE WHO UNDERSTANDS YOUR NEEDS AND YOUR FINANCIAL POSITION. BUYING THINGS ON BORROWED MONEY CAN CAUSE YOU DIFFICULTIES IN MEETING FUTURE REPAYMENTS. DEALING WITH NATIONALISED BANKS CAN BE A VEXATIOUS EXPERIENCE. REMEMBER TAXES MAY GO UP AS WELL AS UP AND YOU WILL HAVE TO PAY THEM.

Inflationary pressures

All good things have to come to an end. The benign environment where China and India delivered an ever more stunning array of goods at fabulous prices is changing into an era when Chinese and Indian demand puts substantial upward pressure on raw materials

Former Tory cabinet minister,John Redwood writing on his blog,which even if you don't agree with the politics is well worth a read.

In fact there are signs that the upwords pressure on inflation is continuing,rapid rises in fuel prices and food prices will make it increasingly difficult for the government to maintain its inflation targets thru this year.

As Redwood writes,it is difficult to understand exactly how the figures for inflation are calculated.Ask anyone in the street and all will maintain that their daily budgets are increasing.

What has kept inflation down is not the economic policy of the government but the globalisation of prices which has put pressure on Uk suppliers to fall into line.The phrase "rip off Britain" much used in the 1990's no longer really applies as the price of all goods and services have in real terms fallen.

Clothing is a prime example.The Primark effect has forced all major chains to reduce their prices.This has been done by driving down supplier costs and rationalising their own businesses.The detrimental effect in the UK has been to force companies to produce more with fewer staff.The consequence is that we are all working longer hours and are under greater work pressure.