Clegg’s new tone on the economy

The coalition needs to work on a climb down.

It’s not every day you open the paper to read about a cabinet minister – one who isn’t the Chancellor - holding forth about the ‘instruction’ that has been given to the Treasury on a key aspect of economic policy. Nor we should we suppose that Nick Clegg elected to give the interview to the FT only to use this line due to a slip of the tongue.  It tells us something.

The specifics are about whether the Treasury should use its ‘balance sheet’ to enable a ‘massive’ increase in infrastructure spending (on housing and transport).  The timing reflects the wider context. The last few weeks have been unkind for the Coalition’s favoured economic narrative. The return of recession has been the key event but hardly the only one. The election of President Hollande, the continued euro-zone crisis, President Obama regularly appearing on our TV screens talking about jobs and growth, a Labour reshuffle that was seen to help unify different shades of economic opinion, and now the IMF saying (once again) that further action may be required, including fiscal stimulus, if the economy doesn’t pick up – all these have unsettled the Coalition.   

As a result the economic and political mood has, for now at least, tilted away from the Coalition on the economy. Pundits who were once scathing about any deviation from the coalition’s economic strategy are now straining to see nuance and be open minded.  Of course, we should never underestimate the fickleness of the commentariat – sentiment could easily shift back again – but the Coalition won’t be relaxed about how this is currently playing out.

One reason for their concern is that they feel very dug in. The stringency and tone of the economic argument made since 2010 on fiscal consolidation didn’t leave rhetorical space for a graceful transition to a different tack if the economy didn’t recover as hoped. That was a very deliberate choice. And given the enormous levels of uncertainly about our economic prospects it was always a foolhardy one.  

Which brings us back to Nick Clegg’s remarks. They are a sign of the resulting strain. Based on the FT report it’s not exactly obvious what the instructions given to the Treasury are, though the point is clearly designed to signal that infrastructure investment will be increased as part of a new emphasis on growth, and that the state can facilitate this without further increasing borrowing (let’s leave to one side the reality that capital investment is actually being slashed). Nor is it immediately obvious why the government thinks that borrowing at rock-bottom interest rates will lead to economic Armageddon yet piling new risks on the state balance sheet is a shiny new idea fit for our times.

Whatever the substance, the way this new tone on the economy has materialised also raises questions.  To date, the rules of exchange for the Coalition have been clear: the parties can differentiate on all manner of issues but when it comes to overall macroeconomic and fiscal policy they have to be seamless. It’s the glue that binds. True, Clegg emphasised that the new edict for the Treasury was agreed by Cameron, so it would be wrong to overstate this, but any perception of disagreement between the coalition parties on core economic strategy would be poison for them.  

Economically, it is to be hoped that there will be a shift in strategy – whatever label they choose to put on it – and others have set out compelling ideas for the form this could take.  Politically, the coalition urgently needs to work out exactly how it wants to evolve its economic narrative in the light of shifting events and then stick firmly to this script. And it might be a good idea if the Chancellor led the way.
 

Photograph: Getty Images

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

Twitter/@timfarron
Show Hide image

Tim Farron is being unfairly maligned for inviting us to smell his spaniel

The truth behind “smell my spaniel”.

Out on the campaign trail in Cambridge, the Lib Dem leader Tim Farron was caught inexplicably inviting voters to “smell my spaniel”.

Here is the shock footage:

“Smell my spaniel, maybe, maybe… oh, how are you? Good to see you!” he said, while the top political journalists of the nation scratched their heads. “A new Lib Dem slogan?” asked the BBC. The “catchphrase of the general election” declared the Telegraph. A new, surprisingly progressive “theological pronouncement”, was this mole’s first thought.

And he has, of course, been ridiculed online:

But no.

Look closer.

What’s going on is clear. Farron is not inviting voters to sniff his spaniel at all; he is addressing a dog. One of the activists in the huddle he is speaking to is holding a little dog wearing a Liberal Democrat rosette:

And here is said dog with Farron:

Farron is clearly being sniffed by the dog, because he is carrying the smell of his own dog, Jasper the spaniel.

Was Farron actually commenting that the little Lib Dem pooch was sniffing its party leader because he smelt like another dog? In these uncertain times of fake news and eroding trust, let’s get our spaniel sniffing story straight.

I'm a mole, innit.

0800 7318496