Leading article: The political battle over the unkindest cuts

David Cameron is right to moderate his party's policy on the deficit

Share
Related Topics

David Cameron has put away the hair shirt and brought out the cosy dressing gown. At the weekend, the Conservative leader moderated his stern rhetoric on the need for immediate cuts in public spending after the general election. Mr Cameron now says there will be no "swingeing" cuts in the first year of a Tory administration and that "we are not about to jeopardise Britain's economic future by suddenly pulling the rug from under the recovery".

Some wonder whether this might be a Machiavellian plot by Mr Cameron to provoke a bond market revolt before the election, which would be fatal for the Government. But that is surely too clever by half. It is more likely that Mr Cameron has taken a long hard look at the feeble state of the British economy and decided that the kind of fiscal medicine his party has been prescribing is premature.

There are certainly strong economic grounds for treading carefully. Last week's revelation from the Office for National Statistics that the economy grew by a meagre 0.1 per cent in the fourth quarter of 2009 surprised many economic analysts. And there are significant hurdles that this recovery must pass too. The return of VAT to 17.5 per cent last month and the imminent end to the car scrappage scheme are likely to subdue consumer confidence. Perhaps personality had something to do with the shift too. Mr Cameron might have decided to listen to some of the more experienced heads around him, such as the Shadow Business Secretary, Kenneth Clarke, who warned last month against "damaging and unsupportable cuts".

Yet whatever prompted Mr Cameron's change of tone, it is welcome. The UK deficit (with £178bn forecast to be borrowed this financial year) is plainly unsustainable. But if ministers slash government spending too early, there is a real risk of wiping out the recovery.

The Tories are right to point out that without a credible plan to bring down the deficit there is a risk that foreign investors in UK gilts will demand higher interest rates, which would push up the cost of borrowing painfully across our economy. But the greater risk at the moment is surely of an anaemic economic recovery slipping back into recession. A "double dip", brought on by premature tightening, would simply end up making the deficit even bigger. And a government which slashed spending without regard to the state of the economy would be cutting off its nose to spite its face.

The Government was crowing yesterday at the Conservatives' reversal. The Business Secretary, Lord Mandelson, twisted the knife, accusing the Tories of being in "confusion and disarray". But Mr Mandelson should be careful. Now that the Tories have stepped back from their dogmatic stance on cuts, the spotlight could easily switch to the Government's own shortcomings. Ministers are yet to outline how they would achieve their own target of cutting the deficit in half by the end of the next Parliament. They have a serious economic credibility problem of their own.

All three major political parties have now moved closer together with regard to the timing of Britain's fiscal consolidation. There is nothing wrong with a consensus providing it is a consensus around the right policy, as it is here. But that does not mean there is no scope for a genuine political contest on economic policy. Now the question on tackling the deficit must shift from "when" to "how"?

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Cancer Research UK: Corporate Partnerships Volunteer Events Coordinator – London

Voluntary: Cancer Research UK: We’re looking for someone to support our award ...

Ashdown Group: Head of IT - Hertfordshire - £90,000

£70000 - £90000 per annum + bonus + car allowance + benefits: Ashdown Group: H...

Day In a Page

Read Next
 

Errors & Omissions: Outgunned by a lack of military knowledge

Guy Keleny
Ukip leader Nigel Farage in Tiny Tim’s tea shop while canvassing in Rochester this week  

General Election 2015: What on earth happened to Ukip?

Matthew Norman
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions
Major medical journal Lancet under attack for 'extremist hate propaganda' over its coverage of the Israeli-Palestinian conflict

Lancet accused of 'anti-Israel hate propaganda' over coverage of Gaza conflict

Threat to free speech as publishers of renowned medical journal are accused of inciting hatred and violence
General Election 2015: Tories and Lib Dems throw their star names west to grab votes

All noisy on the Lib Dems' western front

The party has deployed its big guns in Cornwall to save its seats there. Simon Usborne heads to the heart of the battle
How Etsy became a crafty little earner: The online market has been floated for £1.2bn, but can craft and capitalism coexist?

How Etsy became a crafty little earner

The online market has been floated for £1.2bn, but can craft and capitalism coexist?
Guy Ritchie is the latest filmmaker to tackle King Arthur - one of our most versatile heroes

King Arthur is inspiring Guy Ritchie

Raluca Radulescu explains why his many permutations - from folk hero to chick-lit hunk - never cease to fascinate
Apple Watch: Will it live up to expectations for the man or woman on the street?

Apple Watch: Will it live up to expectations?

The Apple Watch has apparently sold millions even before its launch tomorrow
Don't fear the artichoke: it's a good cook's staple, with more choice than you'd think

Don't fear the artichoke

Artichokes are scary - they've got spikes and hairy bits, and British cooks tend to give them a wide berth. But they're an essential and delicious part of Italian cuisine
11 best men's socks

11 best men's socks

Make a statement with your accessories, starting from the bottom up
Paul Scholes column: Eden Hazard would be my Player of the Year – but I wonder if he has that appetite for goals of Messi or Ronaldo

Paul Scholes column

Hazard would be my Player of the Year – but I wonder if he has that appetite for goals of Messi or Ronaldo
Frank Warren: Tyson Fury will be closely watching Wladimir Klitschko... when he wins it'll be time to do a deal

Frank Warren's Ringside

Tyson Fury will be closely watching Wladimir Klitschko... when he wins it'll be time to do a deal
London Marathon 2015: Kenya's brothers in arms Wilson Kipsang and Dennis Kimetto ready to take on world

Kenya's brothers in arms take on world

Last year Wilson Kipsang had his marathon record taken off him by training partner and friend Dennis Kimetto. They talk about facing off in the London Marathon
Natalie Bennett interview: I've lost track of the last time I saw my Dad but it's not because I refuse to fly

Natalie Bennett interview: I've lost track of the last time I saw my Dad

Green leader prefers to stay clear of her 'painful' family memories but is more open about 'utterly unreasonable' personal attacks
Syria conflict: Khorasan return with a fresh influx of fighters awaiting the order to start 'shooting the birds'

Khorasan is back in Syria

America said these al-Qaeda militants were bombed out of the country last year - but Kim Sengupta hears a different story
General Election 2015: Is William Cash the man to woo Warwickshire North for Ukip?

On the campaign trail with Ukip

Is William Cash the man to woo Warwickshire North?
Four rival Robin Hood movies get Hollywood go-head - and Friar Tuck will become a superhero

Expect a rush on men's tights

Studios line up four Robin Hoods productions