It has mostly been a weekend of terrible and grisly news, especially with the details
emerging from Norway about Anders Behring Breivik and his murderous brand of politics. But there was also, behind it all, a slight rebalancing of the British political debate. After weeks of
grandmaster-like focus on the phone hacking scandal, our politicians have started talking about the economy again. With the GDP growth figures for the second quarter of this year due out tomorrow,
they’re all trying to get their spin in early.
There were a number of intriguing interventions, not least George Osborne’s hint that he will cut “very high tax rates” in his Pre-Budget Report this autumn, and Ken Clarke’s insistence that, what with the prevailing economic conditions in America and Europe, the “icebergs are the worst in the lifetime of anyone now living.” Ed Balls has repackaged the message that he first delivered when the last quarterly growth figures were released: that we will need to see growth of 0.8 per cent tomorrow to be “on track” to meet the OBR’s growth forecast for the year as a whole. And then there’s Vince, always Vince. The Business Secretary reclined across the airwaves yesterday, warning that “we haven’t got a strong recovery,” and advising a dose of further, smarter quantitive easing.
In view of all that, it is tempting to paint tomorrow as Osborne’s day of reckoning — and with some reason. With political pressure mounting over his involvement with News International and Andy Coulson, the Chancellor could do without a fresh burst of doubt about the specifics of his deficit reduction plan. Yet that is just what he is likely to get. Although there is plenty of divergence between the various City forecasters, most are united in predicting that tomorrow’s figures will be fleshless and unimpressive. And calls for Obsorne to change his approach — be it to a Plan B, a Plan A-plus, or whatever — will no doubt tumble on from there. The Spectator offered its own advice a couple of weeks ago. One thing to look out for will be whether any Tories or Lib Dems join Balls in pushing for a reduction in the rate of VAT, or in speaking out more generally.
If there is any consolation for George Osborne it is both that — as Julian Glover makes clear in his column today — he has some leeway in which to operate, and that there are some encouraging signs below the headline growth figures. And there is also the abiding fact that the real day of reckoning will come four years away from now, at the next general election.
But none of that will nullify the difficulty of the next few months, as the Chancellor struggles to come up with a autumn Budget statement that can make a difference. Cutting the 50p rate? The Lib Dems probably won’t approve, at least not without a mansion tax (or some such measure) being imposed in return. Cutting VAT? Ed Balls would bluster and preen endlessly were that to happen. Cutting regulation? Much easier written into a Treasury document than done. For some, it seems, the summer holidays will bring as many stresses as they might ease.
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