"On one side there is the IMF, the OECD, the credit rating agencies, the bond markets, the European Commission, the Confederation of British Industry, the Institute of Directors, the British Chambers of Commerce, the Governor of the Bank of England, most of British business, two of our great historic political parties, one of the Miliband brothers, Tony Blair, and the British people. On the other side is Ed Miliband and the trade union leaders who put him where he is. The national interest or the vested interests. I know which side we're on. We will stick to our plan. Deal with the debts. And get our economy moving again."
He clearly has stuck to his disastrous plan – and look where that has got us. We've just had an irrelevant mini-reshuffle of a Cabinet that apparently has more people with Oxford degrees in PPE than there are women. But there's been no change in economic policy and still no growth plan, just more dither.
Slasher certainly hasn't dealt with the debts, and needless to say hasn't got the economy moving again. In fact it is actually smaller today than when he took it over, and we are still 4 per cent below peak output at the start of 2008.
Allowing people to build a few more conservatories doesn't do it. The growth committee is a farce given that the Tories had 13 years in opposition and the Coalition has been in office for 28 months and all they are going to do is talk about a growth plan.
In 2010 there were many more of us who opposed the strategy, tooth and nail, including the majority of economists who "growth denier" Slasher subsequently dismissed as "deficit deniers".
But let's look in detail at his long list of supporters. The IMF and the OECD did support him, as did a number of business leaders, the CBI, the BCC and the IoD. The Governor of the Bank of England, the bond market and credit agencies were apparently also supportive, but what did they know? That same Governor that failed to spot the biggest recession in a hundred years and who knew nothing about Libor fixing even though everyone else did, as was documented in minutes of a meeting of bankers held at the Bank of England in 2007 and chaired by Paul Tucker, his deputy. Two political parties were supportive, although the Lib Dems had opposed the policy in its 2010 election manifesto. It looks like poetic licence to suggest that David Miliband and Tony Blair were big fans. The British people weren't exactly supportive: given the state of the economy this was the most winnable election in half a century for an opposition. The party that advocated austerity only received 39 per cent of the vote in the May 2010 election in England. In Scotland they received 16.7 per cent of the vote and 15.2 per cent in Wales. When you exaggerate, you do tend to get found out.
That was then: what about now? The British people have made it clear they certainly aren't supportive now. Labour has held a double-digit lead for the last six months, and approximately two-thirds of those polled say they "disapprove of the Government's record to date". According to a recent YouGov/Sun poll that seems pretty typical – the voters are not supportive of the economic strategy. So the booing that Slasher received at the Paralympics shouldn't come as much of a surprise.
The British people have bailed out, if they were ever in. David Miliband and Tony Blair are not supportive. The CBI, IoD and BCC have called for a change of course to boost growth; businessmen and women who signed letters of support in 2010 have remained remarkably silent in 2012. Silence, of course, is golden. Thankfully, Sir Mervyn King has been rather quiet on fiscal policy recently. The credit rating agencies have put the UK on negative watch, and there is general agreement that bond yields are low because we have our own central bank that will not raise rates any time soon as there is zippo growth. As Larry Summers noted this week, moves in credit default swaps for holdings in the UK's debt suggest that investors are more concerned about economic weakness than anything else. The absence of growth is a rising threat to our AAA status.
That, of course, brings us to the IMF and the OECD. In its most recent evaluation, the IMF argued: "Recovery has stalled. Post-crisis repair and rebalancing of the UK economy is likely to be more prolonged than initially envisaged. Confidence is weak and uncertainty is high."
The IMF called for a more supportive macroeconomic stance and a slowing of fiscal tightening if the recovery remains stalled, which it has. The IMF downgraded its UK growth forecast in July by more than any developed nation: to 0.2 per cent in 2012, down from 0.8 per cent it forecast in April, and 1.4 per cent in 2014, down from 2 per cent.
The final nail in Osborne's economic coffin this week came from the last organisation to jump ship, the OECD, who last week slashed their UK growth forecast to minus 0.7 per cent in 2012.
Yet despite the collapse of his fan club, Slasher still continues with his failed Plan A. The raft of new announcements was entirely underwhelming. The PM continues to show he is clueless: as he wrote in The Mail on Sunday two days before the reshuffle – "the fundamental truth at the heart of this debate: you cannot borrow your way out of a debt crisis." Actually you can, and should. Cameron and Osborne's days are numbered.
Amol Rajan
A weekly update from the Editor
