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Osborne digs Britain deeper into the hole

It was classic Osborniana yesterday. He’s world-class at mockery, and the more he lacks positive substance in support of his position, the more he deploys the Aunt Sally defence – attack your opponents, caricature their case, knock down arguments they never made, and pretend you’ve won. His performance yesterday was vintage, inviting the old adage “If you stop telling lies about me, I’ll stop telling the truth about you”.

He spent a third of his Autumn Statement (i.e. 4th budget in 18 months) explaining in defiance of all the evidence that continued austerity was the only way to save Britain, a third attacking an imaginary presentation of Labour policy, and a third head-down racing through a mound of complex and unintelligible detail about hundreds of innovative projects to convey the impression that recovery is well under way. Analysis of the text however tells a very different story.

There is no recovery at all. I asked him to give a precise estimate of the overall growth, if any, arising from yesterday’s package given that, as he himself admitted, it provides for no net increase in demand. I also pointed out that his core £5bn infrastructure package, amounting to precisely 0.7% of current expenditure, was merely tinkering round the edges and couldn’t possibly begin to pull Britain out of deepening slump. He ignored the question entirely and merely spouted the canard that Labour’s policy of borrowing more would push up interest rates, terrify the bond markets, and push Britain into the position of Italy or Greece. So much for rational argument.

None of us have suggested extra borrowing on a scale that would push up interest rates/gilt yields. What we have said that it costs £7bn a year to keep a million people on the dole, and £7bn could instead be spent in generating about 400,000 jobs, which might be a much better way of spending public money. But of course those would be jobs paid for by the public sector, and the one thing that Osborne and Cameron will never do in any circumstances is kickstart a recovery driven by the public sector. This is an exclusively private sector government.

What ditched Osborne was the OBR report accompanying his Statement. It shows UK growth downgraded for the 4th time this year to just 0.9% this year and an even worse 0.7% next year, by comparison with 1.8% last year, i.e. growth has halved under Osborne and is predicted to fall further, real household disposable income has fallen by 2.3% which is a post-war record, and unemployment is rising further beyond its current 2.62 million. To cap it all, the budget deficit is now some £40bn higher than Osborne predicted in June 2010 as a result of rising joblessness and falling government revenues because of collapsing business and consumer confidence. Quite a record.

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