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Serious cooks pass the austerity test. It is easy to produce a good meal if the fresh fish has just arrived and your larder is replete with beef and game. But what if it is dinner for eight in an hour's time, with only scrag-ends in the fridge? That is when the real cook shows his mettle, deploying garlic and sauces as his forbears did, to turn cheap ingredients into great dishes. That is what George Osborne has to do this week, for this is loaves and fishes time, minus the power to work miracles.

The Chancellor has a presentational problem. He must satisfy two audiences, both of whom will be listening intently, and who have different expectations. He must persuade the public that everything possible is being done: the markets, that there is no question of plan 'B'. Nor should there be. That would be fatal, politically and economically. The markets would lose faith, with appalling consequences for credit ratings and interest rates. The voters' faith would rapidly follow. Governments can survive tactical retreats, which create a noise at the time but are quickly forgotten. They cannot survive strategic retreats. To withdraw from plan 'A' now would be the most disastrous retreat since Elphinstone quit Kabul in 1842. Fortunately, there is no danger: it will not happen.

Equally fortunately, the public do not expect it. Most people understand that we are in a mess and that there is no easy way out. If the Chancellor manages the right body language – sombre and authoritative – the public will listen, at least for the moment (the government does need to pay more attention to the task of mobilising consent in the hard times ahead). These days, George Osborne is good at being authoritative. Throughout Mr Cameron's years in Opposition, some Tories were restive about Mr Osborne. There would be talk of complaints from the City. There was a regular muttering sussuration to the effect that he lacked political weight. Moreover, if he had been an American politician, Mr Cameron would not have been allowed to have him as a running-mate. They were too similar: both from Toffachusetts.


None of that had any effect on David Cameron, and one can now see why. From the outset, he was certain that George was the right man for the Chancellorship, and his intransigent faith has been vindicated by performance in office. These days, although George Osborne still comes under lots of fire, no-one accuses him of being light-weight.  

Nor of having a forked tongue, even if he is hoping for divergent coverage on Wednesday, with the Sun stressing help for this and help for that, while the FT's headline reads: "Chancellor holds firm". He has to make the maximum possible impact, with less than one per cent of GDP.

There are two difficulties. The first is the Liberals. If little can be done to stimulate the demand side of the economy, there is an obvious alternative: try the supply side. That means widespread de-regulation. Above all, it means doing everything possible to remove the disincentives to employing workers, especially young workers. Over the past few decades, a number of related developments have discouraged businesses from taking on British workers. The first is the spread of labour-saving technology, which offers an alternative to employing humans. The second is the increased emphasis on employees' rights, which makes it hazardous to do so. The third is immigration, especially from Eastern Europe, which provides a more reliable form of human. Next time you go to a restaurant or to your Club, count the number of British waiters. Then ask yourself why it is so low. In theory, workers' rights sounds an attractive idea – but not if it prevents people from finding jobs. 

Although Alan Greenspan is no longer a name to conjure with, he often talked sense. I remember his contrasting European and American attitudes to employment protection. "You Europeans talk endlessly about the rights of labour, the dignity of labour. Inspiring stuff, and a lot of you have ten per cent unemployment. Where is the dignity in that? In the US, it is different. We talk about the right to hire and fire. The consequence: any able-bodied American who wants a job can have two of them". Telling the unemployed young that they would have rights if they did find a job is as much use as telling a hungry beggar to book a table at the Ritz. Rights that come between the young and a chance to work need to be re-named. They are wrongs. But as soon as the Liberals hear the word "rights", they stop thinking and start sentimentalising. That restricts the government's freedom of manoeuvre.

So does the Elephant in the room: the Euro. It is now a decomposing corpse. But no-one seems able to send for the undertaker. Spain has 22 percent unemployment and the youth rate is twice that. So what is the new government to do? Impose austerity? That would not be a test for an aspiring chef. It would be an incitement to social unrest. The Italians cannot sell bonds except at a penal rate, yet in view of the risk, that rate is still too low. A few months ago, there was a renewed debate on an old topic. Why did the Germans fight on for the last terrible months in 1944/45, when it must have been clear that the war was lost and they were just condemning themselves to more casualties and further devastation?  We can now add a further question. Is the stubborn refusal to recognise reality an ineradicable national characteristic? That said, it is cheaper to fight for a demented Euro than for a demented Fuhrer, and there is a further consolation. This time, most of the damage is falling on others. But when will the Germans learn that pig is for eating, not for headed-ness?

A currency is like blood. If your blood is not functioning properly, nor will anything else. If your currency is malfunctioning, so will everything else. The peoples of Europe need currencies in which they can work, earn, spend, save and invest. Instead, they are stuck with the Euro. So the economies of the Eurozone are trapped on a stage in the Theatre of the Absurd. It would be comical, were it not tragic.

George Osborne will do well tomorrow. His ratings, high already, will climb further. But the climb along the uphill path to recovery will remain arduous, until the leaders of the Eurozone return to sanity. 

12 comments for: Bruce Anderson: George Osborne will do well tomorrow. His ratings, high already, will climb further.

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