It must be tough for George Osborne to decide which of his recent run of bad days has been the worst — but today must rank pretty highly on that list. The announcement by the ONS that the economy has shrunk by an estimated 0.7% shocked and alarmed many, but few more than the Chancellor.
Predictably the shout has gone up for Osborne’s head on a spike. Not just from his adversaries on the left, but also from many of his former cheerleaders on the right. Big names on the Tory side are calling for Cameron to shuffle Osborne out of the Treasury, and replace him with someone else. William Hague is the one I’ve heard most, in the last week or so.
This would, in my opinion, be both a mistake and a misjudging of the problem.
Yes, the economy has nose-dived since he got his hands on it. And yes, his most recent budget was a public relations disaster. But that is a symptom of the real problem, and it’s a problem that Chancellor Hague would have to face up to as well.
Namely, that austerity isn’t working.
Like the Titanic, we were sold this idea as unsinkable, and like the Titanic it’s currently slipping beneath the icy waters of oblivion, with the rich taking all the lifeboats and filling them with tax cuts and obscene bonuses. But whilst Osborne has been the face of this ideology, and the chief axe wielder, he and it are not one and the same. Austerity was the defining policy of the Conservative Party at the last election, and in a desperate gambit to win (which, it might be remembered, he didn’t) Cameron lashed his own and his party’s credibilty to it.
So austerity isn’t working. It has taken the wind out of the economy’s sales, and destroyed the recovery that was in process when the coalition took over. The promised expansion of the private sector hasn’t happened, and we are now enduring the worst double-dip recession since the Second World War.
In order to turn this situation around, the government need to abandon their “cut at all costs” approach, and start taking serious action to stimulate growth, create jobs, and get the economy moving again. But Cameron can’t do that, because it means admitting that he was wrong, and that the entire basis on which he built his economic credibility has bee a fallacy. He won’t do that because he doesn’t have the courage to face the electoral consequences.
So George Osborne is not the problem with economic policy in the UK. He isn’t helping it, and his fingerprints are all over it, but the problem is deeper than one man. And if the Conservative Party forces him out of Number 11 Downing Street, then they’ll feel a bit better for a while. But in three months time, the figures will still be awful, the recovery still won’t have arrived, and the Titanic will still be sinking.