The IMF spoils the coalition's relaunch

Forecast for UK growth is downgraded by more than any other G8 country.

David Cameron is increasingly keen to draw attention to what he calls the coalition's "achievements": cutting the deficit by a quarter, capping benefits, creating hundreds of new academies, reforming public sector pensions and so on. We learned today that the government will shortly publish a "mid-term review" highlighting its "successes". But the IMF has just provided a reminder of one of the coalition's failures: its inability to generate growth.

In its latest World Economic Outlook, the Fund downgraded its forecast for UK growth by more than any other G8 country. It now expects the UK to grow by just 0.2 per cent this year (down from a previous forecast of 0.8 per cent) and by 1.4 per cent next year (down from 2 per cent). The Q2 GDP figures, which will be released this month, will almost certainly show that we remain in recession, a further blow to George Osborne's diminished authority.

But in his defence, Osborne will point out that the IMF has again endorsed his deficit reduction plan. It states that the UK has "appropriately maintained its commitments to balance the structural current budget within five years and to put net debt on a declining path, with additional consolidation in store in 2015–17." Despite previously stating that the UK should enact fiscal stimulus (through "temporary tax cuts and greater infrastructure spending")  if activity continues to "undershoot current expectations" (which it has), the IMF appears to have fallen prey to another bout of fiscal hawkery.

Chancellor George Osborne leaves 11 Downing Street on July 10, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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John Major's double warning for Theresa May

The former Tory Prime Minister broke his silence with a very loud rebuke. 

A month after the Prime Minister stood in Chatham House to set out plans for free trading, independent Britain, her predecessor John Major took the floor to puncture what he called "cheap rhetoric".

Standing to attention like a weather forecaster, the former Tory Prime Minister warned of political gales ahead that could break up the union, rattle Brexit negotiations and rot the bonds of trust between politicians and the public even further.

Major said that as he had been on the losing side of the referendum, he had kept silent since June:

“This evening I don't wish to argue that the European Union is perfect, plainly it isn't. Nor do I deny the economy has been more tranquil than expected since the decision to leave was taken. 

“But I do observe that we haven't yet left the European Union. And I watch with growing concern  that the British people have been led to expect a future that seems to be unreal and over-optimistic.”

A seasoned EU negotiator himself, he warned that achieving a trade deal within two years after triggering Article 50 was highly unlikely. Meanwhile, in foreign policy, a UK that abandoned the EU would have to become more dependent on an unpalatable Trumpian United States.

Like Tony Blair, another previous Prime Minister turned Brexit commentator, Major reminded the current occupant of No.10 that 48 per cent of the country voted Remain, and that opinion might “evolve” as the reality of Brexit became clear.

Unlike Blair, he did not call for a second referendum, stressing instead the role of Parliament. But neither did he rule it out.

That was the first warning. 

But it may be Major's second warning that turns out to be the most prescient. Major praised Theresa May's social policy, which he likened to his dream of a “classless society”. He focused his ire instead on those Brexiteers whose promises “are inflated beyond any reasonable expectation of delivery”. 

The Prime Minister understood this, he claimed, but at some point in the Brexit negotiations she will have to confront those who wish for total disengagement from Europe.

“Although today they be allies of the Prime Minister, the risk is tomorrow they may not,” he warned.

For these Brexiteers, the outcome of the Article 50 negotiations did not matter, he suggested, because they were already ideologically committed to an uncompromising version of free trade:

“Some of the most committed Brexit supporters wish to have a clean break and trade only under World Trade Organisation rules. This would include tariffs on goods with nothing to help services. This would not be a panacea for the UK  - it would be the worst possible outcome. 

“But to those who wish to see us go back to a deregulated low cost enterprise economy, it is an attractive option, and wholly consistent with their philosophy.”

There was, he argued, a choice to be made about the foundations of the economic model: “We cannot move to a radical enterprise economy without moving away from a welfare state. 

“Such a direction of policy, once understood by the public, would never command support.”

Major's view of Brexit seems to be a slow-motion car crash, but one where zealous free marketeers like Daniel Hannan are screaming “faster, faster”, on speaker phone. At the end of the day, it is the mainstream Tory party that will bear the brunt of the collision. 

Asked at the end of his speech whether he, like Margaret Thatcher during his premiership, was being a backseat driver, he cracked a smile. 

“I would have been very happy for Margaret to make one speech every eight months,” he said. As for today? No doubt Theresa May will be pleased to hear he is planning another speech on Scotland soon. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.