The great creep forward

It took Tony Blair about five years to work out what he wanted to do with his government and George Osborne appears to be on a similar, depressingly slow learning curve. It’s not that he lacks ideas. There were plenty of good ones in his mini-budget this week, including tax cuts for the low paid, and for companies. But none of this will speed the recovery. ‘It’s taking time, but the British economy is healing,’ the Chancellor said, to laughter in the house. We are not even halfway through the recovery.

To go through the small print of the budget was to grasp just how vile the outlook is. At election time, voters tend to ask themselves: are you better off than you were at the last election? According to Osborne’s new forecasts, most will answer ‘no’. To make it worse, far from having abolished the deficit by 2015, Britain is now on course to shoulder the worst deficit of any major western country.

Mr Osborne’s strategy has been to talk tough on cuts, while making very few of them. This has meant taking all the political pain while making little economic progress. It suits neither Labour nor the Tories to admit that, after all this fuss, state spending has fallen by about 1.6 per cent from its peak. Even Barack Obama has made more progress, cutting by 2 per cent. The Spanish have managed 9 per cent, the Greeks 20 per cent, and Irish spending is 33 per cent down from its peak. In taking the slow road to economic recovery, Mr Osborne has simply dragged out the agony.

Waiting until 2018 for a balanced budget is bad enough. But on current trends, the average worker will have to wait until 2020 to see their standard of living back to where it was before the crash.