Bidaily Economics Roundup – Friday 23rd July

Data to be released today;

Preliminary Q2 GDP – to be released by the ONS here. Expected 0.6%.

Index of Services – for May.

BBA Loans for House Purchase – for June.

Big themes of the day;

The two most important Central Bankers of the world voice stark differences on policy . . .

ECB President Jean-Claude Trichet calls for cuts in public spending and raising taxes to consolidate the recovery. US Federal President Ben Bernanke says it’s too soon for austerity and that we should maintain stimulus in the short term.

Comment and blogs;

David Blanchflower: For once I agree with Osborne “It is clear from listening to Chancellor George Osborne’s testimony to the Treasury select committee on 15 July that he believes monetary policy should remain loose, and I agree with him on that. Rates must remain, as the FOMC put it, at “exceptionally low levels for an extended period”. Plan B would mean further quantitative easing and lots of it. The New Statesman.

Allister Heath: Strong US Profits good for recovery “My biggest worries over the coming months are not what concerns the mainstream (which is obsessed with the impact of fiscal tightening) but rather what will happen to the US money supply (there have been some worrying signs that it may be dropping uncontrollably) and the impact of new rules on the US financial system, including increased capital requirements (which force banks to lend less) and Barack Obama’s new mammoth reform bill (which is already threatening chaos for asset-backed securities and could hit corporate financing). In the meantime, the earnings numbers suggest a traditional cyclical recovery; let’s enjoy it.” City AM.

Hamish McRae: It is no good squealing about dodgy borrowers who cannot get bank credit “Politicians focus on the lack of lending now, both to companies and on mortgages, and make vague, threatening noises about making banks lend more. But that is plain silly. The problem of lack of lending is not really anything to do with British banks; it is the withdrawal of foreign banks.” The Independent.

David Miliband: To grow, Britain must solve its jobs deficit “By committing to the largest fiscal retrenchment in living memory the coalition has gone for broke. The prime minister says it will “change our way of life”. That’s the problem. Ken Clarke used to say that good economics is good politics. The government has turned this on its head. Framing the debate as a choice between the public and private sectors is certainly good politics, but it is bad economics. The Budget will force 600,000 public sector workers into unemployment. With recent surveys suggesting rapidly worsening business confidence and no evidence of an emerging hiring spree, their prospects of finding work in the private sector are bleak.” Financial Times.

Jeremy Warner: Is a double dip recession heading our way? “The good news is that most of the evidence still suggests that a double dip is unlikely. Today’s second quarter GDP figures ought to show continued recovery, albeit at an anaemic rate, and few of the most commonly watched forward indicators yet point to the economy falling back into the abyss.That is not to say that the economic winds are once more set fair; plainly they are not. The odd quarter of negative growth over the next year or two seems more than likely. The one thing we know for sure is that the path to full recovery is going to be slow and uneven.” Daily Telegraph.