Osborne has always had an overweening arrogance as he plots his path to the premiership before 2020. But his calculation is beginning to desert him. It is extraordinary that he has spent a week sucking up to China, accompanied by six ministers in his retinue, when everyone else is fleeing the country as being in deep economic trouble. The idea that hooking up to China today puts Britain in prime economic position is absurd – what China is exporting is not the world’s manufactured products, but deflation risk – domino devaluations, layoffs and recession. Cosying up to China in today’s conditions is not a smart idea.
Then there’s the lack of reciprocity in Osborne’s dealings with China. He seems prepared recklessly to throw open Britain’s doors to any Chinese company for investment in almost any sector. By contrast China closes off many industrial sectors to foreign investors and imposes limits on ownership in many others. It leads to the farce that a foreign state is welcome to invest in British industry, but British state investment in British industry under the Tories is strictly taboo.
Then there’s the question of undermining UK national security, a charge which Cameron has been quick to throw at Labour, but which with much more substance his own chancellor is guilty of. By pleading with the Chinese to cut the deal over Hinkley C, Osborne is making a double mistake. He is allowing Chinese companies to operate at the heart of Britain’s nuclear industry, he is certainly putting at risk UK national security in the future. He is also subsidising the biggest white elephant in modern politics. Hinkley, if it is ever built, will be far and away the most expensive nuclear plant ever built. It will be more expensive than Crossrail, the London super-sewer and the Olympics all combined. It will be subsidised up to the hilt by the taxpayer to guarantee EDF a 10% return on capital into the indefinite future, and there will be contractual protections again underwritten by the taxpayer against any unpredictable downsides throughout the ;life of the plant. The idea that Osborne and the Tories can be trusted for efficiency and cost-competitiveness is blown sky-high by this shibboleth alone.
Then there’s austerity. Osborne has so far got his way over this because New Labour colluded with the government in pretending that there was no alternative. Now that the Corbyn revolution is making clear that there is a much quicker, more efficient and better way to reduce the budget deficit, Osborne may now begin to encounter heavy resistance if he tries to force through the huge welfare and public expenditure cuts he’s promised. He will either have to back down, which would be a huge political humiliation, or he will find deficit reduction – the centrepiece of his economic programme – in free fall.