Leading article: Europe is not to blame for all our economic woe


Related Topics

The Chancellor is not altogether disingenuous in his claim that the convulsions in the eurozone are "killing off" Britain's recovery.

It would, after all, be unlikely that our economy would escape unscathed from so fundamental a crisis in our single largest trading partner, not to mention the recession into which many of its members have fallen. But George Osborne is in danger of turning a reason for him to act more swiftly and more radically into an excuse for more of the lackadaisical same.

It is true that there is no quick fix for Britain's underlying structural issues. Our manufacturing industries have suffered from decades of spirited global competition and domestic neglect; they would not spring back into life on a word even if Europe were booming. Neither can the perennial concerns about start-up financing, research and development funding and skills gaps be quickly solved. There are more acute problems, however, crying out for action.

The Government's e fforts to boost exports, particularly to fast-growing developing economies, are welcome. As are the moves to cut corporation tax, to streamline the planning system and to take a fresh look at employment rules. Contrary to the claims of Mr Osborne's increasingly vocal Tory critics, the Treasury is, in fact, pursuing a reasonable slate of supply-side reforms, even if they do not go quite so far as the more fanatical would like. But, thus far, the Government has relied too heavily on monetary policy. Although there is, of course, a place for quantitative easing and ultra-low interest rates, they alone cannot provide the jolt the flatlining economy desperately needs. Mr Osborne must make better use of the more immediate tools to hand.

Within the constraints of the deficit-reduction programme, room to manoeuvre is necessarily limited. But there is still scope for a more judicious apportionment of what spending there is, prioritising areas with a long-term economic return, most importantly infrastructure investment. There are also more creative options available.

The much-vaunted credit-easing scheme, for example – under which the Government aims to use its own low borrowing costs to cut lending rates for business – has, so far, made little impact. It should be expanded and also opened up to more types of organisation, such as housing associations.

Meanwhile, nothing at all has been done to unlock the vast reserves of cash salted away by companies too nervous about the future to invest. A tweak to investment tax breaks could help tip the balance. Vague proposals to persuade pension funds to channel at least some of Britain's vast pool of private savings into infrastructure programmes should also be expedited. And Nick Clegg's recent claim, that an instruction "from the top of government" to the Treasury that the Government balance sheet be used to underwrite anything from housing schemes to youth unemployment programmes, needs to be shown to be more than bluster.

The Prime Minister was fond of calling for a "big bazooka" to deal with the euro crisis. His Government could do with following such advice at home.

The thinking behind Mr Osborne's warnings about Europe is not hard to discern. For a Chancellor whose hopes of winning a majority in the next election rest on economic recovery, sowing the seeds of blame early is a good insurance policy (even if it does come at the cost of further irritation for our European allies). For all that, Mr Osborne's strategy is a feeble one. Not only does it provide thin cover for the Chancellor's own failures of fiscal imagination. He is also in danger of losing the argument on deficit reduction altogether, and undermining the foundations of his entire economic policy.

The Chancellor is right. A resolution of the eurozone crisis would, indeed, "do more than anything else to give our economy a boost". But that does not excuse Mr Osborne from finding answers for Britain, whatever happens in Europe. Pleading force majeure is not enough.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

IT Project Manager

Competitive: Clearwater People Solutions Ltd: Our client based in Chelmsford a...

Business Intelligence Specialist - work from home

£40000 per annum: Ashdown Group: An established and growing IT Consultancy fir...

Business Intelligence Specialist - work from home

£40000 per annum: Ashdown Group: An established and growing IT Consultancy fir...

IT Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

Day In a Page

Read Next
Nigel Farage has urged supporters to buy Mike Read's Ukip Calypso song and push it up to the No 1 spot  

Mike Read’s Ukip calypso is mesmerisingly atrocious — but it's not racist

Matthew Norman
Shirley Shackleton, wife of late journalist Gregory Shackleton, sits next to the grave of the 'Balibo Five' in Jakarta, in 2010  

Letter from Asia: The battle for the truth behind five journalists’ deaths in Indonesia

Andrew Buncombe
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells