By Peter Hoskin
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It’s mornings like this when I think of a conversation I had with a Downing Street adviser at the beginning of this year. We were discussing the prospect of a cut in the 50p tax rate, when he laughed grimly. ‘In the face of a Eurozone collapse,’ he said, ‘even measures such as cutting the 50p rate would be like bringing a peashooter to a gunfight.’
Well, today, with the news being broadcast from Spain and the credit-rating agencies, is seems as though we’re staring ever more intently into the face of Eurozone collapse, or at least heightened economic torment. And we all know, by now, the story that tends to follow: economic trauma in Europe bleeds over the Channel to Britain, lowering our growth forecasts and making the task of deficit reduction even more difficult and prolonged. The run-up to the Autumn Statement will no doubt be like the run-up to the Budget. George Osborne will scratch around for growth measures, mindful all the time that he is getting closer to missing his debt and deficit targets.
Which is difficult enough, even if day-to-day politics wasn’t to impose itself on Osborne’s decision-making. But this is the problem: cutting the 50p tax rate was a great political struggle, both within the Coalition and without. If even more radical measures — such as, say, regionalising the minimum wage; an idea which has been floating around Downing Street for some time — are to be implemented, then than political struggle is only likely to become more bitter. Chalk it up as another reason why Europe could fray the ties that bind the Coalition together.