Did the 2007-08 financial crisis cause Brexit, the election of Donald Trump, the rise of Jeremy Corbyn? George Osborne’s answer, 10 years on from it all, echoed Zhou Enlai on the French revolution: it’s too early to say. But at a Spectator event at Cadogan Hall, in conversation with Andrew Neil, Osborne defended not only his policies as chancellor, but also – by implication, and rather unexpectedly – Gordon Brown’s.
Looking back, he said, even if Britain wasn’t particularly well prepared for the collapse of Northern Rock and all that followed that autumn a decade ago, there was nothing ‘radically different’ that could have been done to respond to the crash, either by him or his predecessor.
QE was necessary: even if it has given those with assets a leg up while wages for those in work stagnate, the alternative – leading to higher unemployment – would have been worse. There simply weren’t other monetary weapons available in a crisis that, he said, was very much comparable to the Great Depression.
What came to be called austerity, he argued, was necessary because the financial crisis had ‘permanently or semi-permanently damaged the economy’. But that didn’t mean it was easy. The Tories were absolutely desperate, after 10 years in opposition, to gain power. They were only close to power because they had promised over the years previously to match Labour’s spending. Those days were over, however. When he arrived at No. 11 Downing Street, the budget deficit was significantly higher (at 11.5 per cent of GDP) than when Denis Healey went cap in hand to the IMF. Tax revenues and public spending were out of sync and needed to be brought back in line. So actually Britain, Osborne argued, led the way – whatever Paul Krugman, Larry Summers and others argued at the time. His only regret: he wishes that he had broken up RBS when he came into power in 2010.
But what about now? Throughout the evening Osborne reminded the audience that he was ‘just a journalist’, a humble newspaper editor (although one audience member questioned how he could possibly justify his salary from Blackrock). But as he attacked Brexit, albeit diplomatically (he mentioned neither Theresa May nor Philip Hammond by name) and spoke in favour of immigration, he made plain his centrist views. Notably, at one point he corrected a mention of the Tory party as ‘your party’ and said the Conservatives have ‘moved away’ from him, even if he does remain a member.
‘I’m a private citizen,’ he said. Could he ever go back into Parliament? He deliberately didn’t rule it out, but suggested that his hunch was that it would probably be a mistake. The enthusiasm by many in the audience – there are definitely a few Osborne groupies in London, of all ages – suggested that to many he will be considered the prince over the water for years to come. I suspect he rather enjoys that position.