Any other business | 30 July 2011

Barely a flicker of growth, but Osborne mustfollow his instincts and stick to his guns

Cut taxes now, or pile more taxes on to the bankers? Cut spending even faster to compensate for flagging tax revenues, or slow the cuts to ease the dole queues and boost confidence among consumers
who still have public-sector jobs? Ban royal weddings, or at least the ones that cause the nation to stop work for a week and a half? Print more money, or tell Vince Cable to sod off and stop
rocking the boat?

George Osborne has a rich menu of choices as to how to respond to the news that second-quarter growth barely crawled into positive territory, at 0.2 per cent. But they’re all tough ones, and
apparently he now has the Prime Minister breathing down his neck as well. I said two weeks ago that Osborne is ‘doing the right thing, but against fierce external headwinds and without much
help from some of his coalition colleagues’, and I haven’t changed my mind.

He can take small consolation from the fact that the chief economist of the Office for National Statistics and author of the first-estimate growth figure, Joe Grice, says it might have been 0.7 per
cent but for the Japanese earthquake and Kate and Wills not deciding to call the whole thing off. Osborne should discourage the Bank of England from giving the time of day to Cable’s
suggestion of another bout of quantitative easing: that was an emergency tool to unfreeze the banking sector, and it had inflationary side-effects. And he can ignore Ed Balls’s banging-on
about spending cuts that ‘go too far and too fast’: they’re a minor ingredient of the stagflation afflicting us compared with global factors such as soaring energy prices.