Mike works on financial policy at Cicero Consulting. He has previously worked on political campaigns in both the UK and US, including the presidential election in 2004.
It was far from the ideal accompaniment to the Chancellor’s Autumn Statement. Figures announced by the Office of Budget Responsibility today put UK growth at just 0.9% for 2011, with the 2012 forecast also down to 0.7% and a return to more expected levels not forecast until 2013.
This, coupled with the Chancellor’s acknowledgement at the dispatch box today that the Government will not be able to meet its deficit reduction target by 2015 as promised, will make tomorrow a rather rotten day in headlines I fear.
But we are getting close to the ‘tipping point’ in this Parliament. The Conservative strategy post-May 2010 was to get the deficit under control first-and-foremost whilst ensuring enough time is left to deliver the growth, prosperity and happiness required to make voters put a cross in the blue box at the next General Election.
With economic recovery secured and happy punters across the land, the lease on Number 10 would be renewed, and without the irritant lodgers from Cowley Street in the spare room this time. That was the plan.
But the economic forecasts have not kept to the script. The growth has not materialised as predicted, which in turn is throwing the deficit reduction plan off course. The unforeseen extent of the Eurozone crisis has undoubtedly been a major cause, as the Chancellor was eager to point out at any opportunity today, but that will matter not come 2015. Politics is, after all, a game of results.
Which is why this was a clever Autumn Statement. We heard a long list of measures this afternoon that were clearly playing to the base, and to those swing voters who will need to vote Tory in 2015 if a majority is to be realised.
This was the blue meat. Capping public sector pay rises to 1% for the two years after end of pay freeze; a review into regional pay for government employees; reinvigorating the right to buy; and even the infrastructure spending had a view to 2015 – lots of it for England, but not a single mention of a project in Scotland.
All met with rapturous applause on the Tory benches, and some not unexpected spitting of blood from Labour. They too can now play to their base.
The £40bn credit easing plan – double the rumoured figure – will certainly help SMEs, so vital to growth through the rest of the economy, and the increase in infrastructure will provide a welcome shot in the arm.
Cancellation of the planned January increase in fuel duty will not only be welcomed by families and businesses alike, but will crucially leave that little bit extra in the pockets to spend on the high street. Equally, a cap on rail fare increases to 1% above RPI will have pleased non-motoring commuters.
Whether or not this will provide enough of a stimulus to have any real effect on the numbers remains to be seen, but in truth there is only so much the Chancellor can spend while at the same time ensuring the financial markets continue to attach credibility to his deficit reduction plan.
The big questions remain – will this plan work for Conservative electoral hopes? Will growth in key seats from 2013 be enough to satisfy the swing voters that the Conservatives have not only delivered a credible plan to reduce the deficit that was met with applause from the markets, but have also brought the economic growth that will lead the UK back to more prosperous times?
Just about the only thing you can be certain of this afternoon is plenty more sleepless nights in the Osborne household to come. But he has cemented his credentials for a post Cameron world.