Close examination of the chancellor's budget measures – and the stunning extent of job cuts in the public sector – slides down the agenda in the face of the eurozone's existential travails
There are some staggering figures coming out of George Osborne's budget, not least the prospect that austerity has brought with it a reduction in public sector employment of such enormous proportions that the number of job losses will reach 700,000 by the end of the parliament. For the Tories, if not their coalition partners, this is a champagne-popping moment.
By 2018, the proportion of workers in all sectors of public service will be, on current projections, at its lowest since the second world war.
While the government's figures involve some smoke and mirrors after the chancellor shifted almost 200,000 further education lecturers and sixth-form teachers into the private sector, analysis by John Philpott, director of the Jobs Economist thinktank, shows that, even adjusting for this decision, the Treasury is on course to achieve something Margaret Thatcher barely contemplated.
Yet – like much of Osborne's budget – this seismic shift in the jobs market was drowned out by all the noise from Cyprus.
On balance, that suits the chancellor just fine. Most of the measures that he announced to please voters – the penny off a pint of beer, the freeze in fuel duty and the new home loan scheme – are offset by benefit and spending cuts that leave many worse off.
Close examination of the Help to Buy scheme and the move to underwrite £130bn of mortgages slides down the agenda while Cyprus is teetering on the brink of collapse.
For Osborne, the eurozone is the weapon du jour with which to beat the opposition and the British people. Britain could be like Cyprus, he said in his speech. Without austerity, the government would be forced to pay a higher interest rate on its debts or, worse, ward off a run on the banks.
There are plenty of good reasons to dismiss comparisons with Cyprus. Osborne has also played the Greece card several times and that is just as laughable. Both are tiny economies plagued by corruption and dependent on just a few sources of income – in Cyprus's case, an influx of Russians and Russian money.
More telling for Ed Balls, who proposes spending billions of pounds on tax cuts and extra investment to kickstart the economy, is the situation in France. There, President Hollande is attempting to apply reflationary policies coupled with tax rises on the rich – ideas not wildly dissimilar from the shadow chancellor's.
This should, in theory, provide Balls with the ammunition he needs to hit back. Yet the stories from Paris only feed the Treasury's narrative that the entire eurozone is heading in the wrong direction.
From Gérard Depardieu's escape to Russia to the seemingly unstoppable rise in French unemployment, the news is all bad. Hollande's personal approval ratings have more than halved. Last week, forecasts showed the French economy, which has not grown significantly since autumn 2011, will be flat until at least the summer.
Worse, unemployment will reach 11% this year, its highest level since 1997 and far above the UK's 7.8%.
The Organisation for Economic Co-operation and Development (OECD), the Paris-based thinktank, delivered its verdict on France earlier this month, saying Hollande has the perfect opportunity to restructure the economy. With four years left of his presidency, he can afford to attack restrictive practices and upset unions and employers alike. Less likely is that he will be strong enough to wriggle free from the Brussels budgetary straitjacket to spur growth.
Still, Balls can point to the US, where the economy is taking off after President Obama resisted most calls for budget cuts. But, closer to home, the eurozone is an unalloyed picture of gloom and will remain Osborne's favourite stick to beat Labour with.
Burying good news at Co-op
The headline in Co-operative News – the self-styled global news hub for co-operatives – put it perfectly. "End of an era: Co-operative Group set to sell off general insurance." The end of an era it certainly is. The Co-op has had an insurance gig since 1867, but it is being sacrificed as part of its bid to create a bigger high-street banking presence.
The sell-off started with the life insurance and asset management arms, which were shipped off to Royal London last week. General insurance is now being put on the market and could be worth as much as £600m.
Outgoing chief executive Peter Marks has set his sights on turning the Co-op into a major banking operation. But it is fraught with difficulties. Marks, who bows out in May after a 35-year career with the co-operative movement, already knows this. The ambitious merger with the Britannia building society he orchestrated in 2009 is hitting the bottom line. Of the £662m losses in the banking arm in 2012, £377m were down to lending that has turned bad at Britannia.
Marks is now conducting a takeover of 632 Lloyds Banking Group branches – a deal that could triple the Co-op network and give it a 7% share of the current account market – although the transaction is progressing at a snail's pace. But the financials have been stacked in Co-op's favour to such an extent that some Lloyds investors would rather the deal fell through, allowing the bailed-out bank to get a higher price through a flotation of the branches.
Marks last week revealed that the Co-op had sunk to a £600m loss in 2012. Yes, the losses were down to the bank, but the core grocery business also slowed sharply, with like-for-like food sales down 0.7%. The only areas of growth were in pharmacies, funerals and legal services. All that is needed now is a funeral for the Lloyds deal.
Still a bit too Ricci for some
Name a senior banker at Barclays. Now name the chief executive of Barclays. At a rough guess, nine out of 10 readers would answer "Rich Ricci" to the first question: his name could hardly be more memorable. As for the second question, well done if you said "Antony Jenkins". But could you describe him?
The task is easy in Ricci's case. He's the baldie in the trilby and sunglasses, often seen laughing his head off next to a racehorse. Maybe you'd even be able to name one of his nags – Champagne Fever or the hilariously named Fatcatinthehat.
The point is that, for all Jenkins's assurances that "Barclays is changing", the image of the bank remains firmly embodied by Ricci.
It's because of his bonuses, of course. The sum of £17.6m came Ricci's way this week as incentive schemes matured. These schemes run on three-yearly cycles, so there may be more big paydays to follow in 2014 and 2015.
A chief executive doesn't have to have a high profile. But being constantly overshadowed by a casino banker must be a problem for Jenkins.
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