A very risky strategy

Labour’s attempt to create a new dividing line on cuts is intriguing because it suggests that the government reckons we are pulling out of recession – a message Alistair Darling has been stressing recently. Central to Labour’s argument is that their initial interventions, opposed by the Tories, preserved public services through the recession. By claiming that now is the time to make extensive cuts, beyond mere efficiency savings, suggests that they think the economy is robust enough to survive sweeping public spending cuts.

If an economic boom couldn’t save John Major, I doubt a modest recovery will save Brown from defeat. But, if the economy does recover and Brown initiates cuts, his overall strategy will be vindicated and Labour might avoid the kind of electoral calamity that is expected. That, up until recently, Brown was booming about ‘Tory cuts’ is neither here nor there.   

But this is one hell of a gamble. There is the obvious problem that the government are following Cameron’s lead on the cuts issue, and not to rebalance the books but to vindicate their earlier actions. Therefore, for Labour’s strategy to work, the economy has to pull out of recession much faster than the Bank for International Settlements, among others, predict – sometime in the middle of next year. Sure, there are encouraging signs, but that does not necessarily mean that we will follow France et al out of recession by the end of the year.