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Europe is changing. Here's how. A reported blog.

British austerity cuts: rhetoric and reality

An independent report notes that most of the government's cuts have yet to come into effect.
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Britain's Chancellor of the Exchequer, George Osborne, the global leader in voluntary austerity cuts. A new report shows that for all his rhetoric only a tiny number of cuts have actually been put in place - but still enough to drag Britain into recession. (JUSTIN TALLIS/AFP/Getty Images)

Unemployment is up, the economy contracted in the last quarter, so austerity cuts are biting, right?

That has been the tone of not only my reporting in the last year but all reporting about the British economy. It has been the framework for political criticism by the opposition Labour party.  Its mantra has been "too far, too fast."

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Work: those were the days in Britain

A new study compares the world of work in Britain at the start of Queen Elizabeth II's reign 60 years ago and today.
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Unemployment is at a 17 year high, almost 1 in 5 households have no one working, the world of work in Britain today is very different from when Queen Elizabeth II took the throne. (Matt Cardy/AFP/Getty Images)

As Britain prepares to mark Queen Elizabeth II's Diamond Jubilee in June there will be many comparative studies to mark the changes to the country over the last 60 years but none is likely to match the power of the survey published today by the Chartered Institute of Personnel and Development. The CIPD is an international association for HR professionals and compiles statistics for its members.

In stark and unsentimental numbers it looks at British work life early in the Queen's reign and today.

The total number of Britons in work has risen from 23 million in 1959 to 29 million today. Sounds good. But breaking the numbers down further things aren't quite so rosy.

In 1959, 96 percent of working age men were employed. Only 4 percent worked part-time. Today, 75 percent of working age men are employed, 26 percent of them part-time.

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British bankers: another slap in the face

Former head of troubled RBS, is stripped of his knighthood.
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The former "Sir" Fred Goodwin days before he was removed as head of RBS, Britain's largest bank, back in 2008 (AFP/Getty Images)

Fred Goodwin built the Royal Bank of Scotland into Britain's largest bank in the bubble years and was given a knighthood in 2004 for "services to banking." Goodwin then drove RBS over a cliff in the crash, leaving the British taxpayer to pick up the bill - so far £45 billion ($ 71.6 billion).

Yesterday it was announced that Sir Fred would revert to being plain, old Fred. The papers will probably continue to call him by his pre-kinghthood nickname of "Fred the Shred" for his slash and burn approach to management.

It was conservatives who led the charge to have Goodwin's knighthood taken away. George Osborne, Chancellor of the Exchequer, applauded the decision, "RBS came to symbolise everything that went wrong in the British economy over the past decade."

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Britain, Argentina: more Falkland's anniversary saber rattling

As anniversary of war approaches, Britain sends another warship to patrol waters around the Falkland Islands
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Prince William puts his helicopter pilot game face on at maneuvers last year in Canada. The heir to the throne's deployment to the Falkland Islands has angered the Argentine government. (Pool/AFP/Getty Images)

The 30th anniversary of the start of the Falkland war is just two and a bit months away. Most of the time this sort of anniversary sees old foes extending the hand of - if not friendship - at least respect and honor for the dead.

But not this time. As I blogged two weeks ago, the leaders of the two countries, British Prime Minister David Cameron and Argentine President Christina Kerchner were involved in some nasty rhetoric.

Now, the nastiness is escalating. Kerchner has arranged with neighbor Mercosur countries in South America to impose a ban on all Falklands flagged boats landing on the continent.

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When the going gets tough the arms dealers get going

France lands mass order for fighter jets from India
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A Rafale fighter jet at an air show in Bangalore last year. The Indian government must have liked what it saw since today it was announced it had purchased 126 of them from French arms manufacturer Dassault. (DIBYANGSHU SARKAR/AFP/Getty Images)

Here's an old truism: When first world economies are in the doldrums there is still one tried and true place to get a jolt: the arms market. Prime Ministers and Presidents make calls on behalf of private firms in the hopes of sealing the deal. 

France, looking at projected GDP growth in 2012 of a mere 0.5 percent received its jolt today with news that its aircraft manufacturer Dassault had completed a deal to sell 126 Rafale fighter jets to India. The price tag is estimated at between $10 and 11 billion. French President Nicolas Sarkozy is smiling.

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Britain: riots and rights of parents to smack their kids

British MP stokes controversy by wondering aloud whether last summer's riots owed something to poor child discipline and rules limiting corporal punishment.
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David Lammy shows Deputy Prime Minister Nick Clegg around his Tottenham constituency the morning after riots burned out much of the main shopping area. (STEFAN ROUSSEAU/AFP/Getty Images)

David Lammy is a young star in the Labour Party. He served as higher education minister in Gordon Brown's cabinet.

He did not come to prominence the easy way. Of Afro-Caribbean heritage, he was brought up by a single mother on a council estate (housing project) in one of London's poorest neighborhoods: Tottenham. He gained scholarships from secondary school through his Master's at Harvard before getting into politics and being elected to represent Tottenham in Parliament at the age of 27.

Lammy returned to prominence this summer when his constituency went up in flames during the first days of rioting that engulfed London and other cities around the UK. He was credited for bringing the temperature down.

Now he has created a stir by saying that a breakdown of parental discipline because of laws passed on how physical parents can be in disciplining children may have had something to do with the riots. The 2004 "Children's Act" specifically states that parents can smack their children - but without "reddening of the skin."

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It's Europe, they do summits differently here

Leaders agree fiscal compact - details left for later
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The EU's Big Three: French President Nicolas Sarkozy, German Chancellor Angela Merkel and Italian Prime Minister Mario Monti at eysterday's summit in Brussels. (PHILIPPE WOJAZER/AFP/Getty Images)

EU leaders met in Brussels yesterday. By their standards things went well. Contentious pre-summit issues were kicked aside - in this case, Germany did not push for the right to install a budget czar in Greece. Agreement was reached on a new fiscal compact for the euro zone, although the details of what was agreed were left for later. A lot of money was pledged, enough to make a person wonder where it will come from given how indebted many European governments are.

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British Bank chief gives back million pound bonus

Stephen Hester, CEO of Royal Bank of Scotland, bows to public pressure
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Stephen Hester, ceo of Royal Bank of Scotland (FACUNDO ARRIZABALAGA/AFP/Getty Images)

When a banker gives back a seven-figure bonus that's news. Of course, there is a story attached.

Stephen Hester, is head of RBS, Britain's largest bank and epicenter of the banking crisis in 2008. The British government bailed out the ultimate too big to fail institution and that means the British taxpayer owns 83 percent of the bank.

Hester was recruited by the government of Labour's Gordon Brown to run the bank after the previous management was forced out as the price of the rescue. He took a paycut to try and turn the bank around. He has by all accounts done a reasonable job.

But to wipe debt off the bank's books he has had to shed staff. I blogged about the latest cuts last week.

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Sarkozy commits France to Tobin Tax

France will have Tobin Tax on bank transactions in place by August
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Serious times deserve a serious face. French President Nicolas Sarkozy before a television interview last night in which he confirmed France would go it alone and impose a Tobin Tax on financial transactions. (LIONEL BONAVENTURE/AFP/Getty Images)

Say what you like about French President Nicolas Sarkozy, and his enemies frequently do, he doesn't pull back from controversial proposals.

He has long been an advocate of a Financial Transaction Tax, or Tobin Tax, on banks in the EU. Sarkozy's major partners in the EU are either luke warm about the idea, as in Germany, or 150 percent against it, like Britain.

Sarko has grown tired of waiting for consensus to line up behind him so he announced yesterday France would enact one on its own. A tax of 0.1 percent on trades in stocks, derivatives and computer generated high frequency trading.

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Austerity: Cause and predictable effect

Post-Davos consensus growing among enlightened commentators: policy makers haven't got a clue
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There's a general strike on in Belgium today. The predictable effect of austerity cuts to services and wages. (VIRGINIE LEFOUR/AFP/Getty Images)

Davos is not a place where policy gets made or treaties get negotiated, as I wrote last week. If it has a benefit, it is that the World Economic Forum gets a bunch of the one percent in a single place for a concentrated period of time and allows thoughtful commentators an equally undiluted opportunity to assess what they are thinking.

The result this morning is three excellent essays by commentators working in the mainstream press.

At The New York Times, Paul Krugman makes much of a chart published last week by British think tank, National Institute of Economic and Social Research (here, scroll down right column). It shows that the current economic downturn in Britain is now longer than that of the Great Depression, if you measure the length of time it takes to return to pre-downturn economic output.

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