Published in October 2012 issue of Prospect Magazine
No chancellor is liked; in a recession, they are loathed. As George Osborne has said himself, faced with polling evidence that he is singularly unpopular (Peter Kellner), that should be no surprise. He warned everyone of the effect of his austerity plans when he devised them. Still, there is a particular sting to being booed by the crowd of 80,000 gathered for the Paralympics. On the scale of political capital expended, that registers a high reading.
Gavyn Davies writes, not without sympathy, of the predicament confronting Britain’s chancellor (“The Unfortunate Mr Osborne,”). Right plan—until the euro crisis helped throw the Treasury’s numbers off course, argues the former BBC chairman and chief economist for Goldman Sachs. But the politics of every option now are toxic. Sticking with Plan A will continue to deliver terrible poll ratings, but switching to Plan B—a significant U-turn—would be seen as an admission that he was wrong. As the quip goes, there is no “U” in Osborne.
What, then, should the chancellor do? Most suggestions are not wildly different from his Plan A, even those that present themselves as a radical rejection. Ed Balls’s prescriptions for public spending are not dramatically higher. Davies, a former Labour government adviser and donor as well as leading City commentator, recommends only three adjustments—a bit more public building, some help for business lending, and some targeted cuts in taxes. But that is not so dramatic as to call it a Plan B. All the same, he is probably right in his conclusion that so paralysing are the politics of change that only David Cameron could now make even this degree of amendment. But if the prime minister rewrote his chancellor’s script, he should do the same to that of his coalition partners, telling the Lib Dems that some of their tax ideas are so hostile to business that they also jeopardise a recovery.