With growth weak and the deficit still yawning, the temptations of a voter giveaway are to be resisted

The Chancellor cannot hope to outbid Labour, nor is it in the country’s best interests that he try. But Mr Osborne has form

Share

We might expect a hint of triumph in the Chancellor’s Autumn Statement. Where his March Budget was delivered with recessionary storm clouds re-forming on the horizon, the skies have since cleared and the economy is growing at a healthy clip at last. Inflation is down, consumer confidence is up, and more of us have jobs than ever before. In short, Britain is buzzing again. The IMF, the Bank of England and the OECD have all rewritten previously pessimistic forecasts. Tomorrow, the all-important Office for Budget Responsibility will follow suit.

Yet, even as George Osborne deserves credit for holding his course, the job is far from done. The Chancellor’s first problem is that while British growth may be the envy of developed-country peers, it is shallow by comparison with the slump that preceded it. Not only is the economy still a sight smaller than it was before the financial crisis, the current expansion is of a kind that is unsustainable.

Let’s not be churlish. Services, manufacturing, and even once-beleaguered construction are – relatively – booming. Such a turnaround can only be welcome. But household spending remains the driving force, with mortgage lending and credit card debt inching upwards again to support it. This is not the export and investment-led recovery that Mr Osborne promised and Britain needs. In fact, despite a sharply lower sterling, the trade deficit remains much as it was; and although investment is improving slightly, the bulk of the spending is on (cyclical) inventory replacement rather than (structural) machinery, say, or buildings. Productivity and pay are also still lagging.

All of which adds up to an economy struggling to break its debt-addiction. Here Mr Osborne’s second problem arises. Labour’s swift change of approach – replacing “too far, too fast” with a cost of living crisis – has left the Coalition scrabbling to catch up. Austerity and public debt merit barely a mention in the blizzard of consumer-friendly pledges on everything from payday lending to energy bills.

The Chancellor cannot hope to outbid Labour, nor is it in the country’s best interests that he try. But Mr Osborne has form. His Help to Buy scheme prioritises electoral gain over the risk of a housing bubble. Meanwhile, the marriage tax break and free school meals announced at the Tory and Liberal Democrat conferences respectively are further testament to the temptation to splash out. And ahead of tomorrow’s mini-Budget any number of extras are in the frame, not least the plan to shave a sliver off ever-rising power costs by re-thinking environmental levies.

There are may be tweaks to be made to ease the burden on the least well-off. But they do not come for free; Peter must still be robbed to pay Paul. Even with the recent slowdown in government borrowing, the public deficit remains the defining challenge. The Chancellor must concentrate less on short-term politics and more on the task in hand. That means pressing ahead with tardy infrastructure spending, doing more to boost exports and encouraging companies to invest. More than anything, it means not giving away the recovery before it has happened.

Mr Osborne has proved he can stick to his plans in the bad times. Now he must prove he can stick to them in the good times, too.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Bookkeeper

£23000 - £26000 per annum: Recruitment Genius: This small, friendly, proactive...

Recruitment Genius: Photographic Event Crew

£14500 - £22800 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Software Developers - .NET / ASP.NET / WebAPI / JavaScript

Negotiable: Recruitment Genius: A Software Developer is required to join a lea...

Austen Lloyd: Corporate Tax Solicitor - City

Excellent Salary: Austen Lloyd: A first rate opportunity to join a top ranking...

Day In a Page

Read Next
 

After Savile, we must devote our energies to stopping the child abuse taking place now

Mary Dejevsky
A ‘hugely irritated’ Sir Malcolm Rifkind on his way home from Parliament on Monday  

Before rushing to criticise Malcolm Rifkind, do you know how much being an MP can cost?

Isabel Hardman
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower