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: Search Account Manager

£22000 - £29000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Business Development Executive

£25000 - £32000 per annum: Recruitment Genius: This company is an acknowledged...

Ashdown Group: Marketing Executive - Central London, Bank

£26000 - £28000 per annum: Ashdown Group: A truly exciting opportunity has ari...

Ampersand Consulting LLP: Systems Developer (C/C++, Ruby/ Perl) - £40k

£40000 per annum + Benefits: Ampersand Consulting LLP: Systems Developer (C/C+...

Day In a Page

Read Next
 

Daily catch-up: sculpture, silly jokes and a guide to solving all engineering problems

John Rentoul
Michael Brown was shot and killed by police in August  

Ferguson: Sad truth is that Michael Brown was killed because he was a black man

Bonnie Greer
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital