Coffee House

George Osborne’s only plan is to pray for recovery

6 March 2013

5:37 PM

6 March 2013

5:37 PM

What sort of Budget will George Osborne unveil on 20 March? In this week’s Spectator, Fraser Nelson predicts that it will be an empty one, devoid of radicalism. The piece outlines one meeting in which the Chancellor explained why he is feeling so cautious:

Before every Budget, George Osborne always seeks the advice of various MPs. He usually doesn’t heed it but it’s a good way, he thinks, to keep the troops happy. As the economic headwinds have strengthened, this advice has tended to be increasingly radical and in a recent meeting with the Free Enterprise Group of Tory MPs, the Chancellor made clear he was in no mood for it. ‘Look,’ he told them, ‘I tried radicalism in last year’s Budget, and I had blowback for it. So I’d take quite some persuading to do something radical this time.’ The MPs left with the clear impression that he is now preparing what will be, in effect, an empty Budget.

If Osborne were planning to change course before the next election, he’d have to do it now. The plan he set out three years ago had the Olympics marked down as a turning point — assuming that debt would by then be under control and he’d be mulling some celebratory tax cuts. Instead, Britain seems mired in what is, officially, the worst recovery in history. Progress on the deficit, Osborne’s defining mission, has halted. The AAA credit rating he once prided himself on has gone and youth unemployment is reaching crisis levels. If the Chancellor had a secret plan for growth, now would be a good time to produce it.

So if he’s not placing his faith in tax cuts, what is Osborne banking on? Fraser says the Chancellor’s ‘strategy is not radicalism but Micawberism, a hope that something might turn up’, and that ‘he places far more faith in quantitative easing’. But the graphic below shows that this is not a policy without losers:

[Alt-Text]


In fact, the focus should be less on what’s going on in the Treasury and more on Threadneedle Street:

The importance of cheap money policy explains the excitement about the arrival of Mark Carney, who runs Canada’s central bank. As one No. 10 official puts it: ‘The day when Mark Carney sits down will be far more important than the day when George Osborne stands up.’ With so little importance placed on Budgets, it is the Governor of the Bank of England who is taking the lead on UK economic strategy. Hiring someone of Carney’s global stature was a coup for Osborne, but no one is quite sure what he will do. The future of Osborne’s easy money strategy lies in his hands.

You can read the full piece in this week’s Spectator, available in print and online from tomorrow morning. Click here to subscribe.


Join us after Osborne delivers his Budget to discuss ‘Whatever happened to the recovery?’ Andrew Neil, Fraser Nelson and James Forsyth will discuss what the 2013 Budget means for Britain’s economic future on 20 March. Click here to book tickets.


More Spectator for less. Stay informed leading up to the EU referendum and in the aftermath. Subscribe and receive 15 issues delivered for just £15, with full web and app access. Join us.



Show comments
  • andagain

    If the Chancellor had a secret plan for growth, now would be a good time to produce it.

    No one has one. Labour MPs demand spending increaces for themselves and their supporters, Conservatives demand tax cuts for themselves and their supporters. Put a lot of thought into those recommendations didn’t they?

    And last year, when Osbourne wanted to liberalise planning restrictions, precisely in order to boost this economy that everyone keeps complaining about, all the opposition came from Conservatives.

  • Cuse

    For once, I agree with Fraser.

  • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

    There is nothing Osborne can do. His scope was limited in 2010 by what Brown did in 2008, but he steered the economy in the wrong direction. Thaere was a time to squueze the Bank Directors and force them to put their money into Bank Equity instead they were allowed to rob Shareholders and loot Customers using Taxpayer Guarantees.
    ………They simply failed to bring Banks to heel and simply underwrote their business model with unlimited Treasury Funds. The result will be decades of sluggish activity coupled with collapse and default. Italy is now to challenge Germany in a game of chicken and Germany will have to blink. France has suicides galore and attacks already on a Minister’s home. ……….
    ….Osborne misread the Politics. He is a dimwit with Economics and has been taken prisoner by the disastrous numskulls in the Treasury who have pursued the age old course since 1931 of Devaluation forgetting that the country is more Import Dependent than in 1980 even. We are headed for violent times ahead and Osborne has let Brown off the hook by creating his own Depression rather than avoiding the once Brown brought about. I really thought in May 2010 there would be a change of direction just as i knew in September 2008 Brown had stupidly fallen for a Bankers Ramp and set us on a course of perpetual decline and insolvency

    • Anthony Makara

      Developing a UK internal market is the only way out of this recession and will keep money in our country, making us less hostage to imported inflation. I find it bizarre that the Prime Minister is bending over backwards to trade with sweatshop India when he does nothing to promote Home-Market economics. The only way out of recession for struggling countries is to turn the economy inwards. This will lead to better wages, realistic pricing and a more stable currency.

      • HookesLaw

        Turn our economy inwards! Forward to the barricades with that slogan. You are welcome to it. care to think what might happen if the rest of the world said that?

        • Anthony Makara

          I’d rather buy British made goods and home grown food produce, to support jobs in our country and I’m sure most of our people feel the same. Why give the Chinaman work and the Chinese treasury our money when we have so many of our own people languishing on the dole. I want British business to succeed, to be profitable, for that to happen, it needs a stable market to ply its goods, such a market exists, here at home.

          • Grrr8

            U r clearly an unreconstructed product of the Great Depression. David Riccardo passes you by.

            • Anthony Makara

              Ricardo belongs on the bonfire. We need to make our own history, with our own ideas. Looking back to the past is as unhealthy as the left clinging to the antiquated quotes of Marx and Engels. This is our problem, in our time, and we won’t find the solutions from men who died long before the advent of electricity.

              • Grrr8

                I’d suggest heading over to North Korea, the most autarkic country on earth. Enjoy.
                Sent from my iPad

                • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                  iPad with its 65% Profit Margin….you are a bit of a sucker

                • Daniel Maris

                  I don’t think you understand the way technology is going.

              • Daniel Maris

                I agree. The world has changed and technology has changed the world. China is not going to stop outperforming us on more and more goods and services. Free trade is no longer in our interests.

                • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                  China is already losing jobs to Mexico. Apple is moving production to the USA and investing in new plants. Shipping costs make PCs too expensive from China

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Ricardo was wrong. His theory of comparative advantage is trash

          • http://twitter.com/TheRedBladder The Red Bladder

            The trouble is people. They will keep buying televisions, mobile phones, computers, cameras, out-of-season fruit and vegetables and all the other trappings of modern life. If he could rid the country of people Mr Osborne could run the most successful economy ever!

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Until BRown imposed his Auction for 3G mobile phones were made in Europe and the UK

              • http://twitter.com/TheRedBladder The Red Bladder

                As, at one stage, were many computers. The demise of each and every manufacurer of these was for the same reasons as the demise of the European mobile phone industry and had nothing to do with the political actions of anyone. Are you seriously suggesting that we should never have had 3G? If you are not then the spectrum had to be sold and what better way, for the sake of the UK tax payer, than by flogging them to the highest bidder? In the 1950s this country had a thriving camera manufacturing industry, that went to the Far East as well. We made huge numbers of motor bikes once as well and also wide range of aircraft. I daresay Gordon Brown killed them all off!

        • Daniel Maris

          I agree with the thrust of Anthony Makara’s comments. You are living in the past Hooky. Technology has moved on and makes a Home Market approach much more feasible, though of course international trade will continue. But now we can for instance grow a much greater range of agricultural produce in this country. We can recycle more intensively, so that we don’t need to import so many materials. We can build our own energy generating infrastructure. And we can use a range of home produced materials in manufacture.

          The current free trade/mass immigration/population growth/finance sector dependent approach is not sustainable in my view. It is no longer delivering real growth in disposable income for the average person – it hasn’t done so for probably 10 years now. In fact we have now gone into reverse.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Japan has done rather well out of it as has Taiwan. The USa grew powerful on that basis and has become weak and decrepid since it ceased to believe it

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Where do you intend to get the raw materials Anthony ?

        • Anthony Makara

          It’s important to make the distinction between an internal market based on production and the import of materials to supply that internal market. Of course we don’t want to box ourselves into a position where we are trying to mass produce buna rubber and ersatz coffee, we will always need to trade with others. However actual production of finished goods should take place within the UK to supply the UK market and any niche areas for export. How much being imported by the sweatshop economies of the East could be produced here at home? It will cost more, but will provide the jobs and better wages to end unemployment and in-work benefit dependency. We need to be looking at issues such as these.

          • Colonel Mustard

            Well, apart from very small manufacturing companies which can be successful because quality of product and service is assured by close oversight, the corporate mentality prevailing here militates against competitive industry on a large scale. British corporate management is generally poor but deludes itself very well into thinking it isn’t.

            This ought to be apparent from the recent history of organisational failures, foreign takeovers and multi-bank (if not mountebank) telephone menus designed to avoid rather than facilitate customer service.

            The internal market will only change if small company innovation and dynamism is allowed to expand and compete with corporates but the banks pretty much have that sewn up as their business lending is geared towards making life easy for the latter rather than the former. Ironic, as I suspect (but don’t know) that the corporate defaults are probably greater. And in any case a much lower and less pernicious tax and regulations environment is required. I can’t see that happening with the EU. One of the reasons we have become so import dependent is because non-EU industries can trade more competitively into the UK.

            Trade and industry has been hampered here by tax and regulation, which has affected employment models and opportunities, creating a market for cheap foreign manpower not just abroad but here too. Don’t expect politicians enjoying cheap Filipina

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              You are correct and it is family-companies that need to develop – the UK has far fewer as % Companiues than the USA or most EU countries. It is in reality a Socialist Country with Cartels and Kombinats.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            Unfortunately Anthony, Britain is not a manufacturer of finished goods but of components for assembly into finished goods elsewhere – it is a sub-assembler. Its major companies are foreign owned so they decide where and what is produced. Even nuclear power stations which were invented here are now sourced from overseas after Blair sold off BNFL and Westinghouse. I understand your point perfectly, but can only say it is too late when you consider the factor inputs and just how unattractive the UK is for making and distributing anything

            • Anthony Makara

              We can make the UK attractive again through business-friendly deregulation and other incentives. Ideally though we should be looking to create British owned industry with SME’s merging into bigger more viable concerns that are less prone to shortfalls in liquidity. The fact that British business is so small makes it vulnerable and too much competition drives prices down to the point where paying good wages becomes impossible. I’ve said many times that anti-merger legislation has to be rolled back and firms should be given govt incentives to merge, so that business grows and can fight off competition from abroad. Some might be squeamish about the corporate model but it is the only way to make decimated British business strong again. That we have too many SME’s and not enough Big Business is part of the problem.

              • Colonel Mustard

                There is nothing wrong with the corporate model. It is the management culture prevailing within it that is the problem, especially at board level. It is top heavy, accountancy driven, target managed, ageist and recruitment led. Mid-level workforce managers who know their jobs inside out struggle in a climate of heavy top down reporting demands and regulations, mostly to create upwards moving internal outputs, constant change of the empire building kind, continuous fear of redundancy or replacement, what I call “perfidious Albion office politics”, the constant distraction of experts and consultants re-inventing the wheel and if that were not enough to thoroughly demoralise them, a complete imbalance between their accountability and empowerment. Those calling the shots are not held accountable and those delivering hands on (and usually understanding all the issues) often do not have the empowerment to call the shots. There is a prevailing and pernicious view within big companies that talent can only be found externally which has helped drive the ridiculous salaries and benefits imbalance, as well as creating the supposedly advantageous constant “management of change”.

                The same elitist out of touch hierarchy that blights politics blights the corporate world and has also moved into the public sector. Too often ability is viewed in terms of status and remuneration or short term results. The general apathy of the consumer population ensures that the short-termism is seldom challenged. Then of course there is the market fixing of which recent revelations are probably just the tip of a very large iceberg. It is all almost feudal.

              • Colonel Mustard

                There is nothing wrong with the corporate model. It is the management culture prevailing within it that is the problem, especially at board level. It is top heavy, accountancy driven, target managed, ageist and recruitment led. Mid-level workforce managers who know their jobs inside out struggle in a climate of heavy top down reporting demands and regulations, mostly to create upwards moving internal outputs, constant change of the empire building kind, continuous fear of redundancy or replacement, what I call “perfidious Albion office politics”, the constant distraction of experts and consultants re-inventing the wheel and if that were not enough to thoroughly demoralise them, a complete imbalance between their accountability and empowerment. Those calling the shots are not held accountable and those delivering hands on (and usually understanding all the issues) often do not have the empowerment to call the shots. There is a prevailing and pernicious view within big companies that talent can only be found externally which has helped drive the ridiculous salaries and benefits imbalance, as well as creating the supposedly advantageous constant “management of change”.

                The same elitist out of touch hierarchy that blights politics blights the corporate world and has also moved into the public sector. Too often ability is viewed in terms of status and remuneration or short term results. The general apathy of the consumer population ensures that the short-termism is seldom challenged. Then of course there is the market fixing of which recent revelations are probably just the tip of a very large iceberg. It is all almost feudal.

              • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                We have too few SMEs. You sound like Wedgwood Benn in the 1960s – it was he who merged Leyland into BMC and encouraged mergers. Now these businesses are all gone but BMW went from being a wreck in 1957 to a major force today as a family business. It is your merger mania that destroys innovation in favour of finance-driven disaster – remember Rank ?

                • Anthony Makara

                  If govt had acted to iron out wage and currency differentials through equalization-tariffs to create a fair market decades ago then UK business could have remained competitive. Of course it didn’t help that Joseph and Co in the 1980s wanted industry to fail for political reasons to get rid of organized labour. So UK manufacturing has been on the backfoot for a long time and has not been helped by successive governments. SMEs are easy to start but vanish in great number whenever there is an economic downturn. The fact is they are often too small to survive and too small to be competitive and fend off imports. We need bigger business with perhaps SMEs incorporated in the larger firm yet still having a level of creative independence. Feeder-firms to use a sporting analogy. Unless govt gets a grip on wage and currency differentials UK business will always struggle to compete. The only way to do that is through sensible tariffs that can be shown to work. After all aren’t currency manipulation and sweatshop wages a form of tariff by proxy? We need to create a fair market to end the unfair competition rampant in the free market.

    • HookesLaw

      Banks were required to raise there reserve ratios – for what seems the good reason that they were under capitalised in the face of the recession.

      I do not see how if you wish to live in a free society you can ‘bring the banks to heel’

      I have read that the money is there but businesses are not borrowing. I do not know how true that is but it is symptomatic of the massive heart attack the economy – the world economy too – has suffered.

      Osborne has not created a recession, how can he if the Spectator says he is not cutting quickly enough.

      Osborne is cutting discretionary govt spending and there are various programmes and guarantees around to promote lending and infrastructure spending. Against a background of raising tax thresholds the govt are balancing the speed of cuts with the state of the world and indeed the need NOT to usher in a further deep recession.

      If we are to see some tax cuts these will have to be paid for by further spending cuts.
      It looks like the Budget will be against a background of the highest footsie since 2008. I wonder why the Spectator does not mention this?

      • petermorris

        The article does show that – John Cleese is £127,000 better off – he has shares in the FTSE 100. Even Ronnie Barker is a bit better off £9,000 – he has a few shares. Poor old Ronnie Corbett – he has to pay extra council tax out of his benefits which are going up less than inflation.

        • rollahardsix

          Given that Ronnie Barker is dead I’m not too sure he’s bothered either way :-)

          • petermorris

            The Tories and Lib Dems should take note of that!

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        You know nothing about Banking or Finance. Brown reduced British Bank Cash Ratios to the LOWEST on earth in 1998 backed by a £2000 Deposit Insurance for Customers in contrast to $100,000 in the USA. Banks are easily brought to heel as were trades unions. Either Political Power is exercised or not. This country is in the grip of The cOrporation of The CIty of London and it can be brought to heel. If it is not brought to heel bankers will suffer personal consequences like Detlev Rohwedder – it is inevitable as things intensify

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        ” required to raise there reserve ratios” That has NOTHING to do with Capitalisation. You are financially illiterate. They ARE STILL required to raise MORE EQUITY and are using crap like CoCos instead which will be nuclear meltdown as the next leg of the Great Banking Collapse starts

  • Anthony Makara

    QE can’t resolve the problems with liquidity and will only lead to further inflation which is exactly what this government wants. Did we ever imagine we could see a Conservative government encouraging inflation? As QE continues to debase the value of Sterling we can expect to see further rises in cost of basic foodstuffs as we’ve become so import-dependent with even staples like milk imported from Germany. Encouraging Inflation is now the Coalition Government’s number one policy. How irresponsible and how we are all going to pay for that.

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      Except anthony the high-powered money is not leaving the banking system so it cannit cause general inflation. It is loaned to prop traders who drive up energy, food and commodity pricres which feeds inflation but this cannot be sustained as wages do not rise. It is therefore acting as deflation on households

      • Anthony Makara

        Flight from shrinking Sterling into commodities doesn’t help either. Many of us warned that we are too import-dependent and now those warnings are bearing fruit as the Pounds sinks due to QE. The banks won’t lend if they can’t make a sufficient profit from interest, so fake interest rates are really self-defeating. Of course in the 1980s there was too much emphasis on high-interest rates, which in turn made it difficult for us to compete in international trade, polices that went on longer than necessary as monetarist dogma ruled the day. What we need is balance and right now, just as in the 80s, we are not getting that.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Bankers don’t care about interest when they can charge “Fees”. They have driven their Borrowers to the point of ruin

    • HookesLaw

      What about American QE? What about the ‘back door’ ECB QE?
      If everyone is doing it where is it that we therefore stand out?

      • petermorris

        I think the difference is that the USA spends it as a stimulus package whilst Osborne gives the money to the banks in the hope they will lend more. Last quarter the banks loaned less!

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        NOONE has done it to the extent Britain has. It is 30% GDP in Britain and 14% in USA

  • David B

    I hate to say but if this is the budget he deliveries he has lost his way and he will have to go

  • Russell

    Can the speccie not sort out the obvious trolling going on with the two telemucuses. This serves only one purpose, which is as all socialists do, and that is to introduce chaos and confusion and be totally worthless as these pair are.
    Perhaps another response can be put in which is ‘report’.

    • rollahardsix

      Having said that Russel it is quite funny (to me) and has induced several chortles. While disruptive of serious debate in the short term, isn’t too bad so long as it doesnt completely take over the site in the long run. The country is screwed and it’s probably less than 50-50 whether it can be saved – if we can’t laugh we will cry!

      • HookesLaw

        And it is rather symptomatic of how this site has descended. Can it have much longer to live?

    • Davidh

      It’s called freedom of speech. And the price of that is some earache. Beter to put up with it and he demonstrates his own flaws. Censorship would imply someone is afraid of something…

  • tellymucus

    I can never understand why readers bother to respond to my namesake.
    What’s in a name and how many variations can there be?

  • HookesLaw

    This is a good article to illustrate the pathetic depths the Spectator has sunk to. The boys who run the Speccy remind me of the Anglo Saxon numpties who tried to persuade Canute he could halt the waves.

    Osborne (indeed no one) can no more defy gravity than Canute could.

    • Mycroft

      Osborne is in fact behaving exactly like Canute in taking the reverse course, and and setting out to show that no one can stop the sea from coming in. The only difference is that Canute was undoubtedly right, while Osborne is only probably right.

    • Anthony Makara

      Canute was a Viking not Angelcynn.

  • telemachus

    There is a man who can bring us recovery. In 2015 he will be back in
    charge of our nations finances. Ed Balls is the man the country is
    waiting for. And he may have dressed up as a camp N&zi and been
    photographed staring with interest at a friends genitals, but he was
    never, never, a member of the Bullingdon boys gang who are leading the
    country to disaster!

    • Mycroft

      As far as Mr Balls is concerned, I’m willing to judge by experience. It is a wonder that you aren’t calling for the return of George ‘no more boom and bust’ Brown.

      • telemachus

        There was no bust under Gordon Brown. It would indeed be wonderful if he came back into frontline politics but I am sure that his disciple Ed Balls will put into practice all those ambitions which he still has for our nation. Balls and Brown are probably the greatest economic team our country has ever seen.

        • tele_machus

          this is not me
          I cannot fathom how whoever it is got my email and password
          I am aware they will have been communicated by me to Coffee House Wall before the axe
          If it continues I will consult ico

          • tele_machus

            Nico who I know studies these things will know my style and the veracity of this

            • telemachus

              Whover this is it is not me, I have always used the red rose as my symbol, not this watery pink one being used by an imposter.

              • tele_machus

                Got you

                Look at community

                You will see aroud 300 pink rose comments before I figured how to get rid of the underscore
                For avoidance of doubt will all posters please ignore the telemachus who has stolen my name and avotar

                • telemachus

                  It is easy enough to add a pink rose avatar, and even easier to copy all of my posts to your own account, a child could do that. The real telemachus would never use a pink rose. If you were really telemachus you would know why I can never bear the colour pink, but that is a story I will not reveal here. But you would not choose that colour if you were really me.

            • rollahardsix

              I am sorry, real tele_machus, but you are not half as funny as the new/fake one, but for the record when leftys like you talk, what we here is all the bollocks that fake telemachus comes out with – it is that rediculous

              • tele_machus

                It is a question of belief

          • telemachus

            It is clear that tele_machus is indeed NOT ME. I object to these sort of games being played.

        • Nicholas chuzzlewit

          I cannot make up my mind if this post is hilarious, deluded, obscene or all three. You lend new meaning to the word fatuous.

          • rollahardsix

            Most of all it is hilarious but yes it is all three

          • thucydides

            I think you will find someone is playing games
            I think you should regard telemachus as dead

            • Noa

              If telemachus as dead- long live telemachus!

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          People queuing outside Northern Rock in September 2007 thought otherwise with just £2000 deposit insurance on their savings.

    • Noa

      “…he may have dressed up as a camp N&zi and been photographed staring with interest at a friends genitals…”

      Blimey! News to me, but anything can be expected of the the man who broke the Banks of England once and can be confidently expected to exceed his past performance.

      And with friends like Heil Ed you’d have no need to worry about enemies.

    • tele_machus

      not me

      • telemachus

        It would seem that someone is attempting to hijack my noble Greek name. I can always be found at the sign of the red rose, longing for a socialist Britain. I would never choose a pink rose as my avatar.

        My father Odysseus and my mother Penelope know who I am.

        • tele_machus

          I am upset more about the dilution of the message

          • telemachus

            I will not allow my message to be diluted. We need more Balls.

            • George_Arseborne

              I am really loving it from Telemachus and the clone. This is the greatest product of spectator. Please keep up and forget tugs like Osborne and Cameron

    • rollahardsix

      OMG how long since i have laughed so hard as at these fake telemachus posts today. Whoever you really are please keep it going :-)

      • tele_machus

        And if it has come from CHW ico have been notified and will be along

    • Nicholas chuzzlewit

      I hear the IMF have already booked a suite of rooms in anticipation of Balls becoming Chancellor and the UK becoming insolvent as a result. You will then see what it really means to have government expenditure cut. Personally, I cannot wait to see all of those public sector wasters thrown out of their non-jobs and forced to do something productive for once.

    • petermorris

      That was Prince Harry wasn’t it?

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