You have to hand it to Osborne, he’s managed to manufacture an entirely false story about the economy and get it accepted as the official narrative explaining what’s happened. First he has tried to make out after 2010 that the financial crash in 2008-9 occurred because the Labour government splurged on spending. But this is flatly denied by three sources: one is the IMF report of 2011 which calculated that of the 37% increase in UK public debt from 2007-11, only 2% was due to an increase in public spending (overwhelmingly it was due to loss of revenues due to the deep international recession and to support for the stricken banking sector). Second, the UK budgetary record shows that the Thatcher-Major governments consistently ran up larger deficits than the Blair-Brown governments. The third source is himself: Osborne certainly did not think Labour had messed up since he confirmed in September 2007 that he would match Brown’s spending plans and that “under a Conservative government there will be real increases in spending on public services year after year”!
Second, that didn’t stop him saying in 2010 that Britain was in danger of going the way of Greece and that austerity was the only way to avoid a British sovereign debt crisis and to keep the markets happy. This was an outrageous canard (as Osborne himself well knew) since Greece was locked into a single currency system with fixed interest and exchange rates which could not be unilaterally altered whilst the UK had its own currency and its own ‘lender of last resort’ central bank to backstop its bond issues.
Then Osborne manufactured another lie, that government spending was ‘crowding out’ more efficient private sector spending and thus damaging recovery, so the deficit had to be targeted by a programme of austerity. This is the opposite of the truth: in a slump increased government spending doesn’t take resources from the private sector, it brings into use resources that are idle. Osborne then concocted a political narrative out of a ragbag of falsehoods- linking folklore economics (‘the government can’t spend money it hasn’t got’) to the politics of blame (‘cleaning up the mess left by Labour’) to the politics of fear (the Greek bogey) to a make-believe economic theory (‘reducing the deficit is a necessary condition for sustained recovery’). So how did Osborne get away with these blatant lies and pretences? Partly because his pronouncements chimed with the dominant market fundamentalist ideology serving the interests of the economic-financial elite, and partly because Labour lamentably failed to contest Osborne’s gallimaufry of falsehoods with a true commanding narrative of its own.
Labour even allowed Osborne to make the shaky recovery brought about in 2013 by the easing of austerity (i.e. an acknowledgement of the failure of his own policies) into the rhetorical puff that the UK was growing faster than any country in Europe, so austerity works! Letting him get away with it again and again has enabled Osborne to turn his disastrous economic record as, almost unbelievably, a political triumph.