‘George Osborne is under pressure to tear up his austerity programme after Boris Johnson called on the government to drop its ‘hair-shirt, Stafford Cripps agenda,’ reports the delighted Guardian today. Even Boris is against it! Even he can see that the obvious solution to our debt crisis is even more debt! Except, as you’d expect, it’s all nonsense. Kamal Ahmed at the Telegraph got it right: Boris’s problem is with Osborne’s language: talking about pain, rather than recovery. He quotes Boris:
‘We need to junk the rhetoric of austerity and be confident. I will be unveiling a seven point economic plan to drive jobs and growth in London which drives the whole of the UK economy… [we need to] stop bashing industries in which we are strong like banks… We also need tax competitiveness, we need to move to low and stable tax rates, in London and in the UK and we need to stick to it and stop moving around.’
Very sensible stuff from the Mayor, none of which was reported by the Guardian as it would have demolished its straw man of a splash. ‘Johnson hits out at Osborne’ says the headline. But further into the copy: ‘Johnson did not directly challenge the Chancellor.’ So why the headline? Why tell readers something you know (and later admit) not to be true?
We’re witnessing the difficulty the left has in reconciling its official narrative with what’s actually happening. Yes, George Osborne’s policy is not working – but for reasons that the Guardian can’t quite bring itself to accept. It’s not that his evil cuts are retarding the recovery. It’s that he’s slowly abandoning his deficit plan. The figures show that core government spending is going up, along with the debt and (last month) the deficit. The below graph, from last week’s ONS data, puts it clearly:
So with every budget and autumn statement (AS), Osborne delays pain. Now most of the pain is to come after 2015. It’s a weird-looking graph, but one worth getting your head around because this is where it’s all going wrong. And the press haven’t really picked up on it. James Forsyth has. In his political column (typically four weeks ahead of the competition) he christened this the Osborne St Augustine strategy: ‘Lord, give me fiscal discipline. But not yet.’ The markets are also on to Osborne, and now question whether his talk about austerity is as credible as a Guardian headline. Such doubts explain why Britain is now likely to lose its AAA rating.
Darling had promised to halve the deficit in four years, Osborne is now taking five years and will probably make it six in his next Budget. Those of us who criticised Gordon Brown for dissembling and taking too long to sort out the debt can hardly applaud Cameron for telling even worse porkies and Osborne for making even less progress than Labour promised. In my bleaker moments, I wonder just how much worse a job Alistair Darling would have done.
It suits a great many people — the Guardian chief amongst them — to believe Osborne’s spiel: that he is the cuts man, and that Labour would have borrowed far more. Neither party wants to admit the truth: that Osborne is now borrowing just as much as Labour planned to. That he is cutting total spending less over four years — 3.2 per cent — than the 3.9 per cent that Labour managed in one year of belt-tightening, 1976-77.
One final thing. Jim O’Neill of Goldman Sachs is reported as warning in Davos that that Britain risks a Japanese-style lost decade. If only. From 1999-2007, GDP per capita actually rose by 8 per cent in Japan. In Britain, it looks like GDP per head won’t be back to pre-crash levels until 2021. And yes, we’re washing it all down with far more QE than the Japanese did — so the uncertainties are arguably greater. As they say in Tokyo, Kuso ga okoru
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