Osborne is now in trouble. One after another, all the things he so confidently promised 5 years ago have now turned to dust. He pledged then that the deficit would be down to £37bn by the end of 2014; it is now actually about £100bn. He said that with economic growth real terms pay rises would soon return; they never have. He loved to boast endlessly that Britain had the fastest rate of growth in the Western world; now that has been blown apart today’s announcement that Britain’s annual rate of GDP growth in the 3rd quarter of this year was just 2.6%, whereas the annual rate of growth in the US in the 3rd quarter was nearly double that, namely 5%. He claimed he would rebalance the economy in favour of manufacturing and set in place ‘the march of the makers’; the opposite has happened, with the latest export figures registering the worst in Britain’s history. He promised that private investment would rapidly recover; it has recovered a bit from a deep fall in 2008, but is still below pre-crash levels and far short of what is needed to bolster sustainable growth. It is one long dreary story of blown promises.
Osborne’s only fall-back, now that growth has missed the 3% target by quite a margin and is clearly fading, is the fall in unemployment. But 40% of those ‘jobs’ come from self-employment on a pittance income, and almost none of the rest are full-time jobs at or near the average wage. So Osborne’s only hope of keeping growth going at all now is through an increase in consumer borrowing, even though it’s already hit a record £2.6 trillion. Despite a further 0.1% fall in real household incomes, consumer spending rose 0.9%. This is the primrose path to perdition.
But even if the Tories are doing their best to lose the election, Labour is doing its best not to win it. The could not be a more poignant moment, with all the economic indexes without exception in disarray, for Labour to announce that the Osborne austerity policy had manifestly failed and it was patently time for a major change in policy. There are two ways to cut a deficit: either increase income or reduce expenditure. Since obsessively pursuing the latter is not even now reducing the deficit, which is set to rise this year, the obvious alternative policy is to set in place sustainable expansion of our shrunken economy, bring down unemployment with real jobs, steadily increase household incomes at last, and use the higher tax take to pay down the deficit faster and more effectively. But Labour can always be relied on to fail to rise to the occasion. Oh for some economic leadership!