The green green shoots of home

Much has been made in this column about the conflicting signals that have emanated from the economy over the past few months but this week we have seen some genuine signs of improvement.

While it is premature to put too much store by a single month’s statistics, it would be perverse to ignore the encouraging signs that have emerged from various quarters.

The National Institute of Economic and Social Research reckons that the economy grew in April and May. Assuming that June is no worse than flat, which is a fair guess, then we may already be out of recession. Even Alistair Darling could hardly have hoped for recovery so soon. No wonder he wanted to stay as Chancellor until he could claim some credit.

To back up the recovery scenario, industrial output rose in April, the first rise for 14 months.

The foreign exchange markets are taking the view that the worst is over for the UK. The pound is up to $1.65, which will ease the inflationary effects of the rise in crude oil prices above $70 a barrel. Sterling is at its highest level this year against the euro despite the political turmoil.

The fall in the value of sterling has done nothing to correct the balance of payments deficit since we are paying more for imported goods, including raw materials. The comparatively modest rise in sterling, significant though it is, will not undermine our competitiveness.

Even the housing market is showing early signs of life after death with modest rises in lending and house purchases. In the finance sector, Lloyds has managed to persuade shareholders to throw good money after bad in its heavily discounted rights issue and West Bromwich Building Society has been saved in a debt-for-equity swap with remarkably little fuss.

The FTSE 100 chart over the past month makes interesting viewing. The market has been much less volatile, sticking remarkably closely to 4,400 points but edging a little higher in the meantime. On the other hand, 4,500 points is proving a solid barrier. We are likely to see this pattern continuing throughout the summer with the upsurge coming in September.

You kip if you want to

The really frightening aspect of the row over MPs’ expenses is that voters will abstain in disgust. How wrong can you be? It is all the more important to go to any ballot you can. Better to spoil your paper than sit supinely at home.

If you do not vote you get the politicians you deserve. Nowhere is that more obvious than in the European elections, where voting levels slumped once again. Voters are understandably put off by the fact that the European Union takes not a blind scrap of notice of the people it rules. Yet staying at home will only encourage this arrogance.

The EU is an undemocratic, wasteful, corrupt, extravagant and inefficient organisation (rearrange the adjectives in your preferred order) that makes our own worst MPs in Westminster look positively virtuous.

What is more, the unelected bureaucrats in Brussels squander more money than the MEPs, unlike our own civil servants.

One can twist most statistics to mean what you want them to mean so perhaps I am being selective in what I say next. I believe it is significant that the Conservatives failed to make any real breakthrough in the European elections despite doing so remarkably well in the local elections. Most Conservative voters are much less enthusiastic about Europe than the party leaders.

How pro-European David Cameron must be hoping that Gordon Brown can cling on until it is too late to call a referendum on the Lisbon treaty that transfers more power to Brussels. He knows, as Tony Blair knew, that the UK voters will reject it, as other EU proposals have been rejected in various countries on the rare occasions that they have been put to a vote. We cannot have a referendum because we cannot be trusted to vote as we are told.

I have good news for Cameron. Brown most certainly can hold on until next May. John Major with a much thinner and dwindling majority lasted a good deal longer and even James Callaghan with a minority government clung on for months. They, like Brown, had no policies other than to stay in power until the axe inevitably fell.

Another significant aspect of the European elections was the poor showing of the Liberal Democrats, the most pro-European party in the UK. Normally the Lib Dems benefit from protest votes but not this time.

Politicians and pundits are attempting to dismiss the higher percentage vote for UKIP and the British National Party as a protest vote. That is entirely wrong. These votes were positive votes, cast deliberately for these parties rather than as a wake-up call. I wish that the votes for BNP really could be dismissed quite so easily.

Power without responsibility

A committee of MPs investigating why local authorities deposited more than £1bn with Icelandic banks despite the warnings signs that emerged over several months has accused the Financial Services Authority of misleading the committee.

Answers from the FSA were, according to the MPs, unhelpful to the point were they were deliberately vague. Even a group of MPs can worked out that the financial regulator probably took no steps to regulate local authority finance departments despite the large sums of money at stake.

But this is how the FSA operates. Regulation comes after the event in the form of fines for those who broke rules not adequately spelt out by the FSE in the first place. Unless the FSA starts to lead from the front we shall see financial regulation pass to Brussels with effects that are unlikely to help London as a financial centre.