The chancellor survived the IMF report, but there’s another challenge ahead

George Osborne has got through the IMF’s report on the UK economy. It is far from a ringing endorsement of his approach but, as Isabel notes, its criticisms are couched in such opaque language that I doubt they’ll have much political impact. I also suspect that the Treasury is not unhappy about being told that it needs to get on with returning RBS and Lloyds to the private sector. Selling even a tranche of these bank shares before 2015 would be politically powerful, aiding the Tories in their attempt to argue that they’ve been clearing up the mess that Labour left behind.

The next challenge for the Treasury is the spending review. The National Union of Ministers is in far less militant form than it used to be which has led to increasing Treasury confidence they’ll be able to sort things out. But I suspect asset sales will be used to bridge the gaps between the Treasury’s demand and what the departments are prepared to offer up., For example, bits of the radio spectrum owned by the military and police will be sold off to limits cuts to their budgets.

These asset sales illustrate just how difficult the next parliament is going to be. It’ll be another austerity parliament but with many of the most politically palatable cuts having been made. The best answer to the problem would be a re-imagining of what the state does, but will any party be brave enough to offer that at the next election?