Flaunting the idea in today’s circumstances that the recession is now past must be one of the silliest pre-election claims we’re likely to see in the next 9 months. It omits all the wider context, comparisons with other countries, any sign of general consensus, and above all it omits any detailed examination of the evidence. Osborne should not be crowing, he shouldn’t even be ruefully pleased, he should be deeply apologetic to the British people for mistake after mistake after mistake in his handling of the economy. The charge sheet against him reads as follows:
1 Immediately on getting office he abruptly terminated Alastair Darling’s successful policy of stimulating the economy which was bringing down the deficit fast and instead consigned the economy to deep torpor through his ill-fated austerity measures. If Darling had remained Chancellor, the deficit would have been cleared within 3 years; instead it has taken Osborne over 6 years.
2 Osborne himself unilaterally dug an even bigger hole in Britain’s recession by imposing a big increase in VAT, making deep cuts in infrastructure spending, and making outlandish claims that were it not for his austerity policies Britain would be in the same category as Greece, which damaged business confidence.
3 Taking 6 years to regain the level of annual economic output which was reached 6 years ago is not grounds for satisfaction, it is a cause for humiliation when the US, Germany and France all took less than half as long.
4 Even worse, British economic output per head is still 4% below its pre-crash level, and it will still take another 3-4 years to regain that level. That means that under Osborne’s policies a whole decade of growth in output per head has been lost. Indeed Osborne has managed to bring about the lowest level of productivity compared with any other G7 country except Italy.
5 This ‘recovery’ is the shakiest for a century and has no foundations which will make it last. The big indicator here is that private business isn’t investing. The FTSE-100 companies are sitting on colossal cash stockpiles of £600-700bn, equal to half Britain’s entire annual income, and not planning for an expansive future. It really does speak volumes when the capitalists themselves, Osborne’s allies, are so unimpressed by his ‘recovery’ that they resort to an investment strike.
6 Then of course there is the key point that the stockmarket and financial sector may be chalking up a nice recovery for the top 1%, but that’s not how it feels for 90% of the population. This is probably as good as it’s going to get for Osborne, and it’s not going to change now before the election. Osborne does still have to answer the question: if his stewardship of the economy has gone so well, how is it that Labour is still 5% ahead in the polls?