Labour's right to join the economic debate is under attack

Osborne's attempt to create a sense of equivalence between Fred Goodwin and Ed Balls is a threat to

George Osborne's speech had two distinct purposes. The first and most obvious was to show that the government is not complacent about the stagnating economy and the effect it is having. This he aimed to do with a rash of announcements, the most significant of which is surely the interest in "credit easing", by which the Treasury lends directly to firms. As my colleague George points out, this looks like a tacit admission that Project Merlin - the deal between government and the banks to increase the supply of private sector credit - is failing. It is worth adding that other devices that were meant to stimulate the economy by disbursing government cash, notably the regional growth fund, are also implicitly belittled by this move. The growth fund has yet to actually hand out any money.

The second of Osborne's tasks was to reinforce the coalition's central political message about Labour's responsibility for creating the crisis. This Osborne did with a sleight of rhetorical hand, embarking on what sounded like an attack on the bankers but blended seamlessly into an attack on the shadow chancellor. The aim is to create some sense of equivalence in people's minds between the dereliction of responsibility shown by the likes of Fred Goodwin at RBS and the fiscal management of the last government. It is a crude device but one that poses a big threat to Labour. Osborne doesn't want to beat the two Eds in an argument on the economy, he wants to trash their moral credentials to even participate in an argument about the economy.

Given how effective the Chancellor has already been in promoting his account of Labour profligacy as the prime cause of austerity, Miliband should be worried by this renewed assault on his entitlement to have a view. The argument Miliband made in his conference speech - that the Tories' economic analysis represents the last gasp of a failed model of irresponsible free market capitalism - requires a degree of historical and ideological perspective that many voters don't bring to bear when apportioning blame. Labour badly needs a sharper rebuttal.

One other point on Osborne's political calculations: The heavy emphasis on the failings in the eurozone was inevitable, but the tone, essentially blaming continental governments for creating the conditions that are now holding back the UK economy, was new. The Chancellor clearly felt the need to lash out at "Europe" in some way to appease the large numbers in his party who see the single currency crisis as an opportunity to renegotiate Britain's whole settlement with Brussels. But I sense another element to this argument. Osborne lavished praise on William Hague for his 2001 election campaign dedicated almost entirely to demands to "save the pound". The Tories lost by a landslide. Now that the euro is in dire trouble, Tory strategists are sensing an opportunity to salvage some credibility from their wilderness years. This isn't so much a eurosceptic argument as part of the Tory "decontamination" agenda. Osborne seems to be re-branding old political failures as a kind of foresight.

The Chancellor doesn't just want to monopolise economic argument in the present and future, he wants to rewrite the past too.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Why Angela Merkel's comments about the UK and US shouldn't be given too much weight

The Chancellor's comments are aimed at a domestic and European audience, and she won't be abandoning Anglo-German relationships just yet.

Angela Merkel’s latest remarks do not seem well-judged but should not be given undue significance. Speaking as part of a rally in Munich for her sister party, the CSU, the German Chancellor claimed “we Europeans must really take our own fate into our hands”.

The comments should be read in the context of September's German elections and Merkel’s determination to restrain the fortune of her main political rival, Martin Schulz – obviously a strong Europhile and a committed Trump critic. Sigmar Gabriel - previously seen as a candidate to lead the left-wing SPD - has for some time been pressing for Germany and Europe to have “enough self-confidence” to stand up to Trump. He called for a “self-confident position, not just on behalf of us Germans but all Europeans”. Merkel is in part responding to this pressure.

Her words were well received by her audience. The beer hall crowd erupted into sustained applause. But taking an implicit pop at Donald Trump is hardly likely to be a divisive tactic at such a gathering. Criticising the UK post-Brexit and the US under Trump is the sort of virtue signalling guaranteed to ensure a good clap.

It’s not clear that the comments represent that much of a new departure, as she herself has since claimed. She said something similar earlier this year. In January, after the publication of Donald Trump’s interview with The Times and Bild, she said that “we Europeans have our fate in our own hands”.

At one level what Merkel said is something of a truism: in two year’s time Britain will no longer be directly deciding the fate of the EU. In future no British Prime Minister will attend the European Council, and British MEPs will leave the Parliament at the next round of European elections in 2019. Yet Merkel’s words “we Europeans”, conflate Europe and the EU, something she has previously rejected. Back in July last year, at a joint press conference with Theresa May, she said: “the UK after all remains part of Europe, if not of the Union”.

At the same press conference, Merkel also confirmed that the EU and the UK would need to continue to work together. At that time she even used the first person plural to include Britain, saying “we have certain missions also to fulfil with the rest of the world” – there the ‘we’ meant Britain and the EU, now the 'we' excludes Britain.

Her comments surely also mark a frustration born of difficulties at the G7 summit over climate change, but Britain and Germany agreed at the meeting in Sicily on the Paris Accord. More broadly, the next few months will be crucial for determining the future relationship between Britain and the EU. There will be many difficult negotiations ahead.

Merkel is widely expected to remain the German Chancellor after this autumn’s election. As the single most powerful individual in the EU27, she is the most crucial person in determining future relations between the UK and the EU. Indeed, to some extent, it was her intransigence during Cameron’s ‘renegotiation’ which precipitated Brexit itself. She also needs to watch with care growing irritation across the EU at the (perceived) extent of German influence and control over the institutions and direction of the European project. Recent reports in the Frankfurter Allgemeine Zeitung which suggested a Merkel plan for Jens Weidmann of the Bundesbank to succeed Mario Draghi at the ECB have not gone down well across southern Europe. For those critics, the hands controlling the fate of Europe are Merkel’s.

Brexit remains a crucial challenge for the EU. How the issue is handled will shape the future of the Union. Many across Europe’s capitals are worried that Brussels risks driving Britain further away than Brexit will require; they are worried lest the Channel becomes metaphorically wider and Britain turns its back on the continent. On the UK side, Theresa May has accepted the EU, and particularly Merkel’s, insistence, that there can be no cherry picking, and therefore she has committed to leaving the single market as well as the EU. May has offered a “deep and special” partnership and a comprehensive free trading arrangement. Merkel should welcome Britain’s clarity. She must work with new French President Emmanuel Macron and others to lead the EU towards a new relationship with Britain – a close partnership which protects free trade, security and the other forms of cooperation which benefit all Europeans.

Henry Newman is the director of Open Europe. He tweets @henrynewman.

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