News Analysis

Friday 19 September 2014

Skippy's death is least of Cameron's troubles

Nicholas Leonard

Published 08/08/2011 | 05:00

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When the British Prime Minister David Cameron went to Spain for a few days in May, his choice of holiday reading was 'Skippy Dies', a black comedy by the Irish novelist, Paul Murray, about teenagers in an expensive Dublin boarding school and their obsession with drugs, sex and the meaning of life.

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Cameron knows a thing or two about that kind of adolescent angst. He went to Eton and was lucky not be expelled at the age of 15, back in 1982, when he was caught smoking cannabis.

'Skippy Dies' is 672 pages long so it's not surprising that Cameron failed to get to the end of it while he was in Spain. He now has it with him on his holiday in Italy but his chances of finishing it this month look close to zero.

Instead of a relaxing holiday with his family, Cameron is spending much of his time trying to keep in touch with the escalating crisis of confidence in the western financial markets and the imminent threat to the eurozone.

He has also been briefed on the abrupt outbreak of serious violence and looting in north London on Saturday night, with its disturbing echoes of the unrest that led to the death of a policeman in the same area in 1985.

The Labour Party is trying to make some easy political capital out of the fact that not only Cameron, but also the chancellor George Osborne, and the deputy prime minister, Nick Clegg, are away at the moment.

John Prescott, the former deputy prime minister, said yesterday that the absence of all three senior ministers was "unbelievable" and he rattled off all the crises that he had to deal with during the 10 successive summers when Tony Blair was away. "People think August is a quiet month but it isn't," he pointed out.

The unfortunate truth is that even if Cameron, Osborne and Clegg were all to work 12-hour days in Whitehall this month, there is precious little they could do at the moment.

William Hague, the foreign secretary, is the man in day-to-day charge of representing the government and, like the rest of cabinet, his principal contribution to the stability of the markets is to keep his fingers firmly crossed that somehow the eurozone politicians and central bankers can find a way of restoring confidence.

For the first time in history, Britain now has a better international credit rating than the United States but nobody knows better than Hague that this is no cause for celebrating.

Britain's ability to trade its way back to solvency is heavily dependent on both the US and the eurozone continuing to make economic headway. The unprecedented decision to lend money directly to Ireland earlier this year was a striking symbol of that.

But Osborne, who is on holiday in Los Angeles, is in no position to put up further cash to help other struggling treasury ministers in Greece or Portugal, let alone Spain or Italy.

There was astonishment in Whitehall at the news that China, by far the most important provider of spare cash to the western democracies, had issued a statement "demanding" that the US get its budget straight.

China, like the oil-rich Middle East countries, has, of course, a massive vested interest in the US economy because it has ploughed so much of its reserves into buying American government bonds.

But those bonds are not like shares in a company because they do not carry any votes and, if the US was forced to cut its payments on them, which is the risk highlighted in the downgrading of its credit rating, then there is nothing that China or other bondholders could do.

Some commentators at Westminster see parallels between the events of last week and the crisis of confidence in Europe's banks which led to the economic collapse of the early 1930s.

The shadow chancellor Ed Balls and the former Labour leader Gordon Brown are urging Cameron and Osborne to slow down their spending cuts so as to avoid pushing the economy back into recession.

There is no way that they are going to accept that advice because they think it is the financial equivalent of giving an alcoholic a strong drink in order to deal with a hangover.

Some of their own right-wing backbenchers are pressing them to cut the 50p top rate of income tax in order to stimulate entrepreneurial activity. Osborne is tempted by this but he knows it would infuriate the Lib Dem members of the coalition cabinet and it would also frighten dealers in the financial markets.

The Lib Dems hold their annual conference next month when they are expected to press the government to set up an expert panel on decriminalising the use of drugs by individuals. By the time he gets to the end of 'Skippy Dies', Cameron might well think this is a good idea.

Irish Independent

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