It is almost invariably bad luck to talk about green shoots. But there are some indications that the excoriation that Darling received in April (even from The Economist) for his growth projections may not have been all that deserved.  Housing markets are stabilizing (at low volumes) and interest in property is picking up. The FTSE is about 800 points clear of its low, though still about 1000 below where it was last year.  Yields on longer-dated bonds have rebounded, alarming some conservatives who think this proves the wrongness of fiscal activism.  Perhaps what David Miles said at the IFS Green budget was right: add together the stimulus from low interest rates, cheap sterling, a fiscal boost, an effective VAT cut, and growth does look more likely.

The OECD's (fairly impenetratable) indicators have attracted the same sort of commentary from the FT: that we are "close to emerging from recession".  But every silver lining has its cloud.  In this case, recovery = higher bond yields = more interest cost for governments (and companies) = more taxes/cuts in spending/potential to 'choke off' the recovery. 

Naturally, Doctor Doom sees many reasons for the shoots to be weeds. Perhaps things are not so good in the States:  despite US banks feeling strong enough to repay TARP funds, the chair of a Congressional Panel called for fiercer stress tests, saying: "“We have not actually broken through the worst-case scenario, but let’s face it, the numbers are bad and they’re heading in the wrong direction”.

How the Fed/BOE etc play the recovery will be interesting.  <tortuous metaphor> When the plane is diving towards the ground, it is a no-brainer that you pull hard back on the stick.  Stable flight is more tricky, particularly if bits have fallen off the plane <end tortuous metaphor>. Also, how the government chooses to time its fiscal consolidation. Ah, the government. The government, I hear, is somewhat unpopular, leading to suggestions that the Conservatives may take power.  Paul Krugman considers this very unfair. Himself noticing signs of the 'British bounce', he considers Gordon Brown 'unlucky', and as for the Opposition:

But here’s the thing. While Mr. Brown and his party may deserve to be punished, their political opponents don’t deserve to be rewarded. After all, would a Conservative government have been any less in the thrall of free-market fundamentalism, any more willing to rein in runaway finance, over the past decade? Of course not. And Mr. Brown’s response to the crisis — a burst of activism to make up for his past passivity — makes sense, whereas that of his opponents does not.  . . David Cameron, the Conservative leader, has had little to offer other than to raise the red flag of fiscal panic and demand that the British government tighten its belt immediately.

Robert Skidelsky, discussing the endless debate about whether Keynesian policies work, says that 'Ultimately, the Keynesian revolution was a triumph not of good science over bad science, but of good judgment over bad judgment.'  On this evidence, Cameron does not have such judgment.  But the skill that matters for him - how to excite his political base - is perhaps a different one. 

What are the Conservative policies? David Smith thinks he found them in this speech of Osborne's.  Effectively, it says: fiscally consolidate (fair enough - but how?); stop relying on debt but instead use savings and investment;  and invest in real things, not nonsense short-term things.   The last prescription is so similar to Will Hutton's 'The State we're in' that he even has the grace to name-check it, without quite elaborating on how the book was a massive attack on the Conservative/Anglo-Saxon way of doing things. 

The middle prescription - that the UK should henceforth run a surplus, saving, in effect - sounds like a fine idea, but in a world filled with many governments wanting to be savers, some quite obstinately (hello, China and Germany), he fails again to be clear on how. Once again, repeat after me: if we all save at once, and no-one consumes, we get a deflationary recession.  If you are allergic to international cooperation, this sort of coordination is tricky,

Some of the other prescriptions, which are meant to provide more incentives to save at a micro-level, strike me as both (a) trying to interfere with free choice at that level and (b) inevitably ending up rewarding people who have savings over those who do not.  Um, the rich.  And it needs to deal with the problem an OECD report identifies: that such schemes attract participants, but not actual new saving. 

So I am still a bit in the dark about what our likely next government is really planning in terms of economic policy.  I gave this task to one of our excellent interns, Charlene: I think it is the toughest assignment yet. 

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UPDATE:  Robert Peston has identified a potential point of real substance in Osborne's speech: removing the favourable corporate tax treatment of debt, thereby giving the Treasury a boost, giving venture capital a more level playing field when up against highly leveraged private equity funds, and deleveraging the corporate sector somewhat.  Credit where it's due, this is an interesting idea. 

And more details on Green Shoots:  Following on from last week's strong service sector results, there is news that apparently the manufacturing sector grew in March AND April