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Osborne hits hubris, big time

Autumn StatementOsborne’s performance today in the mis-named Autumn Statement (which might be better titled Pummelling the Opposition, with occasional fleeting references to the economy) was a mix between a fragging operation beloved of the Bullingdon Club and a fantasy presentation of how he was going to produce a budget surplus by 2018 (or was that 2030, or never?) when last year the budget deficit (technically net public sector borrowing) was still a massive £115bn, having just reduced from the previous year by just £3bn.

It was a tour de force of voodoo economics, the witchdoctor himself hardly able to believe his luck when unexpectedly after drinking poison the economy revived in March, to his own amazement as much as everybody else’s, allowing him now to come to the House only 9 months later and with brazen arrogance pretend that he had all along had a long-term plan.

If ever he did indeed have a long-term plan, it wasn’t to cut the deficit (except incidentally) but to put the genie back in the bottle from which it temporarily escaped after the last Great War and restore Britain to its rightful order in which everyone knew their place, the rich prospered mightily and the poor went to their duly appointed workhouse (or, in modern garb, got sanctioned and starved all the way to the nearest foodbank), and hierarchy and class and money prevailed, before all this pseudo-democracy and equality stuff prevailed. How the Tories loved it.

Not a word was breathed by the conjurer about the fragility of his vision. You would never guess that business investment, the mainstay of any sustainable recovery, was still a shocking 25% below its pre-crash level or that of the 0.8% growth in the last quarter, only a derisory 0.1% was contributed by business investment. You would never imagine that UK productivity was one of the lowest in the OECD, hardly surprisingly when growth has hardly shifted yet the same amount of production has been generated, as the Tories never tire of saying, by a significantly bigger workforce (though they don’t mention that the new jobs are nearly always low-paid, temporary, zero hours contracts – what matters to the Tories is that they bring down the unemployment figures).

Nor did the dreamer hazard a word about falling wages or flat exports – again, not surprisingly, since these two are the key sources of future demand, without which investors with money to burn are not going to invest, so no so-called recovery will last very long. Wages are down since 2008-9 by 9% in real terms and still falling, while exports despite the 25% fall in the exchange rate over the last 5 years have still not taken off and the deficit on traded goods this year is still likely to exceed a staggering £100bn a year. Given his real dependence on consumer borrowing and the incipient housing bubble, Osborne’ triumphalism may be ugly and nasty, but probably rather short-lived.

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