Autumn to winter

Chancellor of the Exchequer Gideon 'George' Osborne presented his Autumn Statement today, which was more interesting in the background than the content. Growth forecasts have been downgraded from 1.7% this year and 2.5% next year to 0.9% this year and 0.7% next year. The previous forecasts, whilst credible at the time, seemed to err towards optimism and now we are getting the raw, unpleasant facts.

The problem is that the nation's economic strategy relied heavily on growth to reduce the deficit: as has often been mentioned in this blog, there are no cuts as such.

The upshot is to delay Osborne's plans by two years. Barring other disasters - and there may be many - the economy will look to be in good shape by 2017, but there has to be an election by 2015, which will now be fought on the Conservative side in the context of continuing economic pain. Britain is likely to avoid recession - which is defined as two successive quarters of negative growth - but not by much. Against that, it is likely that the Eurozone is already in recession.

On the one hand, Osborne is unlucky: neither he nor anyone else could have predicted the appalling economic mismanagement conducted by Merkel and Sarkozy which, coupled with a heavy dose of incompetence from America and Japan's economic model still failing, has brought much of western capitalism to its knees. Osborne's plans might have worked, now they are subject to ridicule.

On the other hand the Chancellor (isn't it about time we called him the Finance Minister? The whole thing desperately needs a more modern image) - on the other hand he is lucky in his enemies. The British people have accepted the need for belt tightening and do not believe those, such as the felicitously named Mr Balls, who say we could have it easier. If it isn't hurting it isn't working.

I am reminded of H.L.Mencken's dictum: 'Democracy is the theory that the common people know what they want, and deserve to get it, good and hard.'

Osborne's other measures were a raft of Government initiatives, such as more spending on railways, ideologically unsound and leaving the Government open to suggestions that it should have done more of this and earlier. Fortunately, Osborne has very little room for manoeuvre and these are not large enough to cause any lasting damage. Far better would have been to opt out of swathes of legislation coming from Brussels, an earlier rise in the pension age - 2026 is too far away to make much difference - and a reduction in corporation tax. Better than that would have been to identify whole areas of life in Britain in which the government shouldn't be involved at all. At least they are keeping a cap on public sector wages, which is something for the tribunes of the people to think about when they take tomorrow off.

Politically, the thing for Osborne to do now is keep his head below the parapet. I suggest spending more time at Euro-meetings, if his waistline can tolerate it, returning every so often to say we aren't doing quite as badly as them.