If the Euro area decides after all to lend Greece another 53 Billion euros that they can’t pay back, we need to ask what was the crisis for? Why close the banks, undermine asset values, put Greek people into more misery and cut the output and tax revenues of the Greek economy? Why seek to change the Greek government and then lose a referendum when the Greeks called the Euro area’s bluff? And if Greece agrees to the austerity it rejected, why did they put themselves through the pain and cuts of the last few weeks, when they could have volunteered for austerity earlier to release more cash?

Extend more loans and pretend that you will get your money back has been acting as a policy for years. It has become a lazy habit which the markets and the borrowers like. Once again as Homer nods Mrs Merkel looks the other way. The aim may be to defer the continuing Greek crisis for 3 years to her successor.It will then be even more difficult and costly to resolve.

If by any chance Germany this time stands up for honest money and says No to those who want to give Greece a loan which will one day become a gift, then the remodelling of the Euro can begin. Fewer members with decent finances would be a more sensible proposition, doing less damage to the economies locked into it.

It is unlikely the cost of a further bail out for 3 years will be as little as Euro 53 billion. Some forecasts say there will be extra money from the IMF on top. They also need to factor in the costs of bringing the Greek banks back to life. I can’t see how they will get away with less than an extra Euro 100 billion to reopen, strengthen and make liquid the banks and offer Greece some spending money for the next three years. Then there would be presumably at least Euro 100 bn of debt cancellation or easier terms to a similar value on top of that.

If Germany is wavering and thinking of giving in again to Greek demands, at least they should offer far less money for a shorter time period, and expect to see progress on the Greek reforms before they offer yet more money and a longer period of support.The problem is, the medicine Germany thinks the Greeks need is still the opposite of what the Greeks believe they need. The underlying tensions remain. It is difficult to see how sacking more public sector employees can work unless the private sector economy has the cash, credit and exchange rate to allow it to grow and create more jobs than the public sector destroys.

The Greek economy must be weaker now than when the rows began earlier this year, making recovery more difficult. Kicking cans down the road is more problematic if the people kicking want to go in opposite directions.

Over Labour’s long years in power from 1997 to 2010 the public sector received plenty of spending to help it on its way. This was all called investment, and some of the money did indeed go into investment. Despite this there was no productivity growth at all in this large part of the UK economy. The government needs to turn its prime attention to boosting public sector productivity. It needs to work with its own staff – and the employees of the all the Councils and quangos – to help them work smarter and achieve more for less cost. That is what productivity is all about. That is what the UK manufacturing sector has been doing well year after year.

The problem with the lack of public sector productivity gains is not just that it reduces the performance of the whole by depressing the average, but the poor performance of the public sector in crucial areas like transport does damage to the private sector as it tries to become more productive.

The national and local highways authorities do not make getting to your destination in your vehicle their priority. Councils seem to take a delight in shutting the roads to vehicles as often as possible. They persist in allowing the placement of pipes and cables under main roads, so every repair or improvement requires digging up the road. Many Councils seek to take roadspace away from general vehicles for priority routes for buses or cycles, instead of supplying additional safe capacity for special users. Roads are closed for long periods after an accident or incident, and long after anyone injured has rightly been given priority and rescued. Councils phase lights badly, holding up traffic on the main routes in favour of minor routes or pedestrian crossing when there is no-one wishing to use the green phase and no sensor to realise this. Councils put in far too many sets of traffic lights, deliberately creating traffic jam traps that never flow.

Meanwhile the nationalised railway, Network Rail, gobbles huge sums of money and delivers very little new or better. Large sums go on changing from diesel to electric, when what is needed is more capacity and more reliable and intelligent signals. The nationalised railway impedes development of its substantial property estate, demands ransom payments from Councils and others that wish to bridge the railway line or make other improvements near rail routes, fails to think about total journey times and the difficulty of getting to many stations and parking there, and leaves parts of its estate in poor condition.

The government’s productivity drive should have short and long term programmes to deal with these major blockages to our economy. For our local roads we need

1, Roundabouts to replace traffic lights at difficult junctions
2. More traffic sensors on traffic lights
3. More left and right turning lanes at junctions to improve flows
4. More bypasses
5.Fewer permissions for road closures
6.All replacement pipes and cables to be placed under pavements or verges with easier repair access
7.More bridges over railway lines and rivers, as a shortage of bridge capacity is often the single main cause of peak congestion into and out of main towns and cities
8. Cycle routes provided safely away from main A roads

What we need for our nationalised railway will the subject of a future post.

Mrs Merkel seems to be at war with herself. Euro Merkel knows she has to do what it takes to keep the Euro together, and to advance her European dream of a German led united Euro area – or EU as she would prefer. German Merkel knows that more and more of her fellow countrymen and women, and members of her own party, have lost patience with Greece and do not want a Euro more of Germany’s money to be lent, given or pledged to Greece.

Mrs Merkel also probably has enough self knowledge of both Germany’s considerable power in the EU, and the constraints on being seen to use that power too openly. Were Germany to lead a public ousting of Greece from the Euro, there would be bad press about brutal Germany cutting loose weaker countries because Germany had no sympathy with poorer countries nor any wish to share burdens and riches within the Eurozone. Were Germany to give ground and lead yet another bail out of Greece, but insist on austerity policies, there would be those who spoke and wrote about an authoritarian and dogmatic Germany forcing others to do as Germany instructed. Neither is a welcome thought capable of uniting a happy Eurozone.

So Mrs Merkel dithers. She tells us all where there is a will there is a way. If only Greece can behave better they might be accommodated. This is rather like saying if Greece had elected a CDU government there would not be a problem. At the same time she seeks to reassure her restive German friends and Parliament that this time there will be no easy terms bail out for a Greece which has failed to conform to past loan terms and to work properly through agreed programmes.

The tragedy for the Euro area is no-one around the table seems capable of leading the zone to a decision. That is why we have had weeks of damaging bad press for the zone, weeks of lending Greece more money from the ECB who assisted whilst the politicians delayed, and now two weeks of banks closed, no additional liquidity, and an air of great crisis. The ECB was made to carry the Euro from January and has now lent a total of Euro 89 billion to Greek banks, only to see them close and be unable to pay out people’s money when requested.

The preparatory work for Sunday’s meeting can run over once again all the old detail about what Greece might cut from its state budgets and which tax revenue it might be able to raise, but this is now looking very dated. The economic have deteriorated markedly thanks to the dithering of this year. Greece is starved of cash. Tax revenues have fallen. Output has suffered from the lack of confidence and now from the bank closures. Agreeing a modest three year loan and some changes to the state budget is not about to trigger a decent recovery and set Greece on the path to financial independence within the Eurozone. It might kick the can down the road one more time, only to create a bigger and more expensive problem some months later.

The first fix the assembled leaders need to arrange whether Greece leaves or stays within the zone is a fix for the banks. That will now be costly, given the damage inflicted on them. The banks may well need extra capital, as well as substantial additional liquidity. They remain the responsibility of the ECB and the wider Eurozone unless and until Greece leaves the Euro and has her own independent Central Bank. We are probably talking tens of billions here.

The second fix is for the Greek economy. Whilst I do not agree with all of Syriza’s policies, they are right to say the EU/IMF package has failed so far to get Greece growing, but growth has to be the priority. How do you get cash to flow and sensible new credit to be extended in a part of a currency zone that is as damaged and stressed by its single currency’s rules and massive German surplus?

The third and largest requirement is to fix the politics. The Euro bosses decided to take on the Greek government, aiming either to change their policies or to change the government. Instead the Greek people backed their government. What is the Euro area’s answer to a democratic government that simply does not accept Euro area rules? Lecturing them on their duties as borrowers has not worked. Either the Euro area has to have the full powers it needs to overrule a member state’s government, or it has to sit down and talk to whoever is elected and try to accommodate them. The last few weeks have seen a largely impotent Euroland clumsily interfering in Greek politics and losing. On Sunday they have to show they have learned from this bitter experience and can find a way to improve the position. If they decide they cannot lose face and lend Greece more, they need to help Greece organise an orderly transition to the drachma. That has to start with the ECB standing behind the Greek banks so they can open again.

Yesterday’s budget papers confirmed that real public current spending has been rising. On page 65 of the OBR Report they confirm that real government consumption increased by 1% per annum 2010-14. This is interesting as when I argued that there would be real rises in current spending on the cash figures most said that was wrong and the official forecasts talked of cuts.

2015-20 is forecast to show further real growth in government consumption. General government consumption is to grow in real terms every year between now and 2010, as is real government capital spending apart from minus 0.1% in 2016.

The OBR Report summarises the impact of the budget well. It says that departmental government spending will be £83 billion higher than in the March plan. The tax rises in the budget will increase revenues by £47 billion over the Parliament (dividend tax, insurance tax, pension tax and vehicle excise duty), to be offset by cuts in Income Tax and Corporation tax worth £24.6bn. Borrowing will be higher in 2016-17 to 2018-19 by £16.7bn.

The Budget reshapes the financial story of the 2015-20 Parliament. Instead of planning a £60 billion a year increase in cash spending by 2019-20 the Budget lifts this to an extra £69 billion, similar to the increase over the last Parliament. Instead of keeping current public spending under very strict control in the middle years, this Budget increases 2016-17 spending by £15 billion and 2017-18 current spending by £25 billion compared to the March plans. The detail of which departments benefit will be given in the autumn.

So how is this all paid for? Revenues are now more buoyant, and the latest forecasts think this will continue. With no further increases in the main taxes the aim is to raise £168 billion more in tax in 2019-20 than the government collected in 2014-15. That is £11 billion more than forecast in March. The government still eliminates the deficit by 2019-20 on these estimates. The following year, 2020-21 is also shown for the first time. The plan is to have £40 billion of extra spending that year, paid for by a rise in tax receipts of £42 billion.

These augmented figures for spending mean the NHS and schools can receive the extra money they need, and the Defence budget is now offered increases to meet the NATO 2% of GDP commitment. The economic forecasts point to satisfactory growth for the next few years, with inflation and interest rates trending up a little but staying relatively low. Productivity is also shown rising.

The budget measures include more road investment, more apprenticeships, better education and training, a new national living wage, lower corporation tax rates and a new system of taxing dividends.

They told us if the Greek people voted against the final proposals of the Euro area they would have to leave the Euro.

The Greeks voted No, so they were invited to new talks to stay in.

We read they would have one last go at sorting it out at a special meeting yesterday.

That failed.

So now the Greeks have been invited to table more proposals by Friday, with a meeting for the heads of government of the whole EU scheduled for Sunday to endorse a deal or agree to no deal and its unspecified consequences for Greece’s Euro and EU membership.

Meanwhile the unpleasant threats to Greece continue, with no proper support for Greek  banks and with  talk of bankruptcy and Euro exit.

This is not a sensible, friendly or effective way to run a single currency. Those who want the Euro need to support all parts of the zone and have confidence in its member states and banks. To its critics the Euro is now doing obvious economic damage to Greece and more widely, and is causing major tensions between European countries.

This December the UN seeks again to reach a global agreement to cut carbon dioxide output. The new agreement will take the form of a legally enforceable protocol and legal instrument attached to past agreements. It will come into force in 2020. The advocates wish to limit the earth to a 2 degree temperature rise, and believe that if the world cuts human generated carbon dioxide emissions by enough this precision in temperature control can be achieved. There is little comment on the other variables which might have an impact on the weather and climate in 2050 and 2100.

We now know the offers of the three main players. China, the world’s largest source of human CO2 emissions (25% of world total) has indicated that it should reach peak output of carbon dioxide by 2030. In the meantime it will build up renewable electricity generating capacity to limit the rise in carbon output it plans.  The USA (11% of world total) under Mr Obama wishes to make a   contribution, and has offered to cut its emissions by 28% in 2025 compared to a 2005 base level.  The EU (9% of world total) acting on behalf of all member states is enthusiastic about the process. It has offered a “binding, economy wide, domestic greenhouse gas emissions reduction target of at least 40% by 2030”. This is compared to a 1990 base.

The fact that China’s emissions will grow mean that advocates of this policy will be disappointed by the offers so far made collectively by the main creators of greenhouse gases. Once again the response of the world is asymmetric, with the EU offering the biggest cuts. This will continue to expose the EU to the need to substitute dearer energy for cheaper energy, and will limit EU competitiveness. Whilst markets are understandably concentrating on the tribulations of the Euro, the EU’s climate policy is also going to have quite an impact on EU costs, and divert  more industry out of the EU altogether. At least this process will cut the EU’s carbon footprint but it will also  boost the footprint of those places that sell us the industrial products that become displaced.

BBC reform is on the agenda. The appointment of Mr Whittingdale  as Culture Secretary and related briefing indicates change is in the air. He will preside over the licence review, and has been a past critic of the BBC poll tax or licence fee.

Some wish to use this review as an opportunity to re open the issue of alleged BBC bias. I do not think this is a good idea. The issue of bias requires robust democratic exchange, with more than one party or interest group thinking they are badly done by. These are  matters to be fought over within any given financial and governance framework for broadcasting, but should not dictate those frameworks.

I do agree with those Conservative and UKIP critics who think the BBC has a strong pro EU Guardian style bias. Many interviewers repeat the 3 million jobs at risk lie about EU& membership and still claim not to have heard its simple refutations. Most interviewers talking to business people invite them to say they wish us to stay in the EU in any interview, yet people against EU membership  talking on other subjects are not asked for their view on the EU. When discussing issues like fuel poverty and dear energy the BBC seems to go out of its way to avoid mentioning that dear fuel is an EU policy. These are matters for immediate review with the BBC but not a proper part of any decisions on its future. The BBC after all belongs to all of us, including pro EU voters.

The main  issues at stake in the licence review have been partially dealt with by the surprise announcement yesterday to the Commons of a new financial settlement. The BC loses the broadband levy, but takes over responsibility for free tv licences for the over 75s. In return it gains indexation of a confirmed licence fee.

This still leaves important issues like removing the criminal offence from non payment  of the licence fee, the definition of public service and the question of how the BBC is allowed to compete with other media outlets using tv tax revenues.

It is unacceptable for one of the leading Central banks of the world to fail to tell people on what basis it will support Greek banks and get them open for business again.
It is the job of the ECB to supply Euros to Greek banks when people want to withdraw their money. It is their duty to allow external settlement of accounts from Greece to the rest of the zone and beyond. Greek business with money needs to pay foreign suppliers. If Greek banks are solvent as the ECB has always said they are, they must supply the cash. If a bank in the zone becomes insolvent, then the ECB must trigger its recapitalisation. Playing politics with the livelihoods of Greeks and undermining Greek businesses by failing to allow transactions is doing damage to the Eurozone as a whole as well as to Greece itself.

I hold this truth to be self evident. People are happier if they are self governing.
The choice for the Greek people was a simple one. Did they wish to sign up to another period of the same policies that delivered a cut of one quarter in their incomes and mass unemployment, especially for their young people, or did they wish to try something different?
We now know the Greeks by a large margin voted for their democracy. They voted for change. They voted against the policies a German led Europe has imposed on them. And yes, it was a vote against German influence, as the explicit posters of the campaign with pictures of the German Finance Minister and unflattering words made clear.
I think all should respect the strong view of the Greek people. If the Euro area wishes to keep Greece in the Euro it has to move swiftly to help. If it wants them out, it needs to tell us urgently how it can be done sensibly with least damage.
Those who still have something to lose, particularly those with jobs from the EU, may have voted for more of the same. Those who have already lost probably voted for change. Those who are optimists probably voted for something different, whilst some pessimists accepted the German led EU’s strictures. Those who believe in Greek democracy voted for their government and those who believe in the EU scheme voted for the deal which may be back on offer.
To some in Greece it was a vote for the dignity to disagree with The Euro bosses. For others it was a vote to conform, to show they are trying to be good Europeans.
This is a seminal moment for the whole EU/Euro project. As Greece votes No the EU has to rethink its approach to national democracies. Other nations will want and need the ability to change EU/Euro policies they do not like.
It is not a pleasant sight watching the group of Euro area Ministers and their Central bank gradually throttling the Greek economy by refusing it the cash it needs through the commercial banks. If these are solvent banks they should be sent the money they need. If a bank is no longer solvent it should be recapitalised under the agreed procedure. Any advanced economy needs a fully operational banking system. It is a prime duty of sovereign government to maintain a freely traded currency that allows all legal transactions.Why doesn’t the Eurozone do that?
If today the European Central Bank does not re-open the facilities for the Greek banks we will witness the extraordinary sight of the European Central Bank refusing to help damaged banks within its own zone, and refusing to behave as normal central banks as lender of last resort and provider of liquidity to commercial banks under its supervision. This may force the Greek state to issue its own money to pay bills and to re-open the banks.If the Euro area refuses early and urgent talks with Greece then it makes crisis more likely. It should also lead other members to ask what kind of a common currency is it, if people with deposits in banks in the zone cannot get their own money out, and if businesses in Greece with money are not able to pay their bills with other parts of the zone.