Cable positions himself as the man for a Lib Dem-Labour coalition

Forecasting a hung parliament at the next election, the Business Secretary looked to life after the Tories.

Vince Cable used his speech to the Lib Dem conference to present himself as a free radical, a man who was prepared to work with the Tories and Labour when they were right and to criticise them when they were wrong. He restated the original rationale for the coalition - to provide national government at a time of "permanent crisis" - but added that he made no apology for maintaining "good communications with politicians across the spectrum", before motioning as if he had just received a text, "Please Ed, not now, this is not the time". Cable's political motives became clear at the end of the speech, when he suggested that the most likely outcome of the next election was another hung parliament (the British people, he said, would not want to "entrust their future to any one party"). If you want someone who can lead the Lib Dems into coalition with Labour, he implied, I'm the man for the job; messrs Miliband and Balls already having ruled out working with Nick Clegg.

Throughout the speech, the Business Secretary was careful to combine attacks on both parties with references to those areas where they could work together. So he derided the Tory "headbangers" who wanted a "hire-and-fire culture" and the "backwoodsmen" who opposed a mansion tax, but offered a strong endorsement of George Osborne's deficit reduction plan and declared that he had "considerable personal sympathy" for the Chancellor, who was attacked both for "borrowing too much" and "borrowing too little". In a notable jibe at Andrew Mitchell's expense, which was left out of the original text, he also joked that he was a "mere pleb". As for Labour, he mocked Ed Balls's plan to eliminate the deficit over seven years, rather than the coaliton's six ("wow!"), but nodded to Ed Miliband's agenda when he called for a culture of "responsible capitalism".

Cable, who has openly declared that he is prepared to stand for the Lib Dem leadership, was astutue enough to avoid anything resembling disloyalty to Nick Clegg, praising the Deputy PM early on for proving that "coalitions work". But he also deftly positioned himself as a social liberal ("this is no time for the state to be stepping back"), who, unlike Clegg, continued to command respect across the centre-left. While conservative columnists write paeans of praise to the Lib Dem leader (see Boris Johnson's piece in today's Daily Telegraph), Cable reminded activists of a Telegraph poll showing that he was the cabinet minister who Tory activists most wanted to evict from the government. The message to the party's base - "I'm one of you" - could not have been clearer.

Vince Cable gives his speech to the Liberal Democrat conference in Brighton. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Brexit has forced the Tories to retreat from austerity

George Osborne's decision to abandon his budget surplus rule is an acknowledgment of economic reality.

Before Brexit, it was intensified austerity that was threatened by George Osborne. But after the event, the Chancellor has taken the reverse course. In his speech to the Manchester Chamber of Commerce, Osborne abandoned the ambition that has defined his Treasury tenure: a budget surplus.

He said: "The referendum is expected to produce a significant negative economic shock to our economy. How we respond will determine the impact on jobs and growth.

"We must provide fiscal credibility, continuing to be tough on the deficit while being realistic about achieving a surplus by the end of the decade. That's exactly what our fiscal rules are designed for."

Rather than a dramatic reversal, Osborne's decision is now merely an acknowledgment of economic reality. The rule is automatically suspended when growth falls below 1 per cent (as it almost certainy will) in order to avoid further depressing output. But even before Brexit, Osborne was regarded by the IFS as having only a 50 per cent chance of achieving his target.

Labour is highlighting its consistent opposition to the rule, which it again called for the abandonment of after Brexit. A senior source hailed a "huge victory" for the "centrepiece of our economic criticism of the government over the last nine months since Jeremy [Corbyn] took over the leadership." I'm told that Labour will not abandon its Fiscal Credibility Rule as it is "more robust and flexible". Unlike the government's surplus target, it allows borrowing for investment, mandating only that day-to-day spending be balanced (a condition suspended if the Bank of England believes monetary stimulus has become ineffective).

As well as reflecting the new economic reality, Osborne's announcement was also an acknowledgment of the new political one. It will most likely be a future Chancellor who determines the path of fiscal policy (starting with this year's Autumn Statement). At her leadership launch yesterday, Theresa May pre-empted Osborne by declaring that "we should no longer seek to reach a budget surplus by the end of the parliament". Among the Home Secretary's notable supporters is Cabinet Office minister and arch-Osborneite Matt Hancock. The Chancellor's decision to echo May's stance is being seen by some as the prelude to an endorsement. But Michael Gove, who reportedly wants Osborne to remain in post, also acknowledged the new fiscal reality at his launch this morning.

Far from more austerity, it is already clear that Brexit will mean considerably less. As Osborne knows, there is no alternative.

George Eaton is political editor of the New Statesman.