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

Recruitment Genius: Telesales & Customer Service Executive - Call Centre Jobs

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Ashdown Group: Finance Manager - Covent Garden, central London - £45k - £55k

£45000 - £55000 per annum + 30 days holiday: Ashdown Group: Finance Manager - ...

Ashdown Group: Systems Administrator - Lancashire - £30,000

£28000 - £30000 per annum: Ashdown Group: 3rd Line Support Engineer / Network ...

Recruitment Genius: Graduate Web Developer

£26000 - £33000 per annum: Recruitment Genius: A Web Developer is required to ...

Day In a Page

Read Next
 

i Editor's Letter: A royal serving the nation

Oliver Duff Oliver Duff
David Cameron met with Ukrainian President Petro Poroshenko prior to the start of the European Council Summit in Brussels last month  

David Cameron talks big but is waving a small stick at the Russian bear

Kim Sengupta
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn