Today, the CBI, the organisation that represents British business, did the Chancellor a huge favour.
“The UK economy is moving from flat to growth,” said John Cridland, the Director-General of the CBI. Analysts at the CBI predict that Britain will have GDP growth in 2013 of 1 per cent and that growth is expected gradually to pick up thereafter. In 2014, according to the CBI, growth will double to 2 per cent.
These sound like measly figures and as has been indicated before on this blog, if the Chinese government were to announce figures of this sort, the stock markets of the world would fly into a panic.
However for Britain, and for George Osborne especially, these figures are as manna from heaven. If he has done it—if he has succeeded in getting the economy back on track—then the Conservatives will have made for themselves the single biggest rhetorical stick available with which to beat Labour at the next election: “You broke the economy—we fixed it.”
The possibility of campaigning on the back of that message will perhaps stiffen the sinews and summon up the blood of the Conservatives who were thrown by the recent success of Ukip in council elections. Many seats were contested in what were regarded as Conservative heartlands and Ukip took 25 per cent of the vote. But if Osborne’s austerity program has worked, then the Ukip wave may recede.
If the CBI is right and if Osborne can get growth to return, then Ed Miliband faces a very difficult strategic quandary. He has so far based his strategy on the premise that the government is cutting too far, too fast and so long as Osborne’s austerity policies remain in place then growth is impossible. If it now becomes clear that Miliband was wrong all along on this point, what then? And what also for Ed Balls? He wrecked the economy, we fixed it, now he wants a second go? A difficult one to counter.
However, the CBI’s picture is not entirely rosy. Unemployment, it says, will rise in 2013 and inflation is causing prices to rise faster than wages.
But if it is correct in its central point and Britain’s economy is on an upward trajectory, then Cameron, Osborne, and perhaps even Clegg, will reap considerable political rewards.