Not so much a middle way as a muddle way: the Autumn Statement was just a progress report

The Chancellor had no choice but to press on, or risk loosing face. Lucky for him, our triple A rating is safe – at least for the time being

Share

Whatever the numbers yesterday, George Osborne couldn’t change course. Bringing forward a Plan B would have been to say, “I have been on the wrong track since I took office two and a half years ago”. However dim the prospects, he would have to press on.

That analysis may be pop psychology, but the Chancellor is helped by the realisation that his austerity programme is by no means the sole explanation of deteriorating growth prospects. Households have been spending less because consumer prices have been rising faster than expected. At the same time, Britain’s export performance has been disappointing, partly because of the eurozone crisis but also because of poor competitiveness, a historic weakness.

In the light of these factors, and with fresh forecasts to study, we can turn to the first major question that arises: how safe is the triple-A rating that British government debt commands on international markets, and with it our safe-haven status? Which in turn tells us whether we can continue to enjoy very low interest rates or not. A jump would be very damaging and send us spiralling down into deep recession.

I believe the UK will maintain its top rating at least for a few months. International investors will be impressed by Mr Osborne’s refusal to soften his economic policy. And they will look carefully at the reduced growth forecasts, wondering if lower tax revenues and higher welfare payments would make the budget deficit balloon again. Probably not is what I guess their reaction is likely to be. The triple A is safe for the time being.

Next, I apply the “we’re all in this together” test, which I take to mean reducing the dangerously wide gap between the haves and the have-nots. Among industrialised countries, only the US exceeds us in inequality. This is a much more serious issue than just summoning up a sort of wartime spirit to get us through an unusually long recession. For substantial inequality has been shown to exacerbate social problems.

The Chancellor announced only one decision that helps the less well-off – the cancellation of the planned increase in fuel duty. It doesn’t put money into their pockets but it removes a threat to standards of living. Moreover, the uprating of welfare benefits for people of working age by just 1 per cent and the similar treatment of tax bands for those in employment is negative because it is likely to be less than inflation. So closing the gap depends upon the Chancellor’s treatment of the rich. And here we find only one change: the reduction of the tax saving on making very large payments into personal pension schemes. And that’s it. The gap between the haves and the have-nots is as wide as ever.

Finally, we should remember that Mr Osborne is a politician like any other, whether Conservative, Labour or Lib Dem. That means that he is much more interested in the announcement effect of new policies than he in making sure they are carried out. The first requires political skills while the follow through is – well, boring work.

This is especially true in relation to decisions about infrastructure spending. The 2011 Autumn Statement, after all, contained grand promises of new roads, railway improvements and other big projects, many repeated yesterday. Yet John Longworth, the chairman of the British Chambers of Commerce, said that much of Mr Osborne’s 2011 list of bypasses, trunk roads and rail links turned out to be pie in the sky. Or as Noble Francis, the economics director of the Construction Products Association, remarked: “The Government generated a lot of positive headlines” – from a politician’s point of view, job done – “but much of this turned out to be rhetoric.” So no surprise that spending on construction has dropped by 11 per cent in the past 12 months.

So this is where we are. The statement was a progress report, nothing much more. There were tweaks to the plans but nothing radical or unexpected. Mr Osborne’s speech was competent and Mr Balls’s reply all over the place. The Chancellor can be satisfied. The British economy will continue its painfully slow recovery. Events overseas are likely to be more significant than anything the Chancellor does, with the risks all on the downside – a eurozone break-up, US budget policy going unresolved, Chinese economic slowdown turning serious, Israel attacking Iran. Hoping that none of this happens, we muddle on.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Volunteer Trustee opportunities now available at The Society for Experimental Biology

Unpaid Voluntary Position : Reach Volunteering: Volunteer your expertise as Tr...

Early Years Educator

£68 - £73 per day + Competitive rates of pay based on experience: Randstad Edu...

Nursery Nurse

£69 - £73 per day + Competitive London rates of pay: Randstad Education Group:...

Primary KS1 NQTs required in Lambeth

£117 - £157 per day + Competitive London rates: Randstad Education Group: * Pr...

Day In a Page

Read Next
Residents of the Gravesham constituency are 10 times closer to what Peter Hain scorns as the “Westminster elite” than are those of Linlithgow and East Falkirk  

Will no one stop the march of localism?

Jonathan Meades
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam