George Osborne is entitled to look smug

The popular pastime for financial commentators this season is sticking pins in George Osborne. To those on the left who hate everything about him, to those on the right who think he should have used the fiscal crisis as an opportunity to slash state spending far more than he did, to those in the middle who prefer their politicians to be vacillating blunderers blown by fate, and thereby easier targets, this Chancellor is pretty bloody irritating.

The UK is expected to be the G7’s fastest-growing economy this year, and Osborne’s doubters at the IMF have had to admit, in a mealy-mouthed way, that they were wrong to try to point him away from the path of austerity — which other critics now say wasn’t much austerity at all, which is why it did less damage than expected. Earnings growth has risen to match inflation for the first time since 2010, turning Ed Miliband’s ‘cost of living crisis’ into last year’s soundbite even though real earnings will remain below their pre-crisis level for years to come. Business investment is growing, deflecting fears that an uptick based on consumer spending would be fragile and short-lived. Osborne’s cheeky declaration in favour of ‘full employment’ was followed by yet another sharp fall in jobless numbers. Despite a continuing battle to shrink public borrowing, there’s talk of tax cuts ahead of next year’s election.

Well, this column has been more consistent than most in saying that Osborne was on the right track all along. ‘Barely a flicker of growth, but Osborne must follow his instincts and stick to his guns’ was my headline back in July 2011. Of course there are many elements of recovery for which he can take no credit, including the pessimism–defying rates of private-sector job creation and new business start-ups ahead of the return to growth, and the impact of the Bank of England’s quantitative easing, which is reckoned (by MPC member Martin Weale) to have contributed 3 per cent to GDP since 2009.