Osborne prepares to admit defeat on debt reduction

The Chancellor will abandon his debt rule to prevent even deeper cuts.

In his "emergency Budget" in June 2010, Osborne declared that "unless we deal with our debts there will be no growth". But as all Keynesians know, the reverse is true. Unless you stimulate growth, you can't deal with your debts. According to the latest independent forecasts, Osborne will be forced to borrow £174.9bn more than originally planned from 2012-16, a figure that is only likely to rise as growth remains anaemic or non-existent.

Indeed, so bad is the fiscal situation, that, as today's Times reports (£), Osborne is preparing to announce the abandonment of his golden debt rule in the Autumn Statement on 5 December. The rule, which forms the second part of his "fiscal mandate" (the first relates to the structural deficit, which the Chancellor aims to eliminate over a rolling five-year period), is designed to "ensure that debt is falling as a share of GDP by 2015-16". Based on the most recent set of forecasts from the Office for Budget Responsibility, published at the time of the Budget, debt will decline from 76.3 per cent in 2014-15 before dropping to 76 per cent in 2015-16. But since then, the economy has fallen back into recession, with borrowing already up by more than a quarter on last year. As a result, independent forecasters now say that Osborne will miss his target. The IMF, for instance, has forecast that debt will rise from 78.8 per cent of GDP in 2014-15 to 79.9 per cent in 2015-16.

In response, the Chancellor could, of course, announce billions more in tax rises and spending cuts. But that would only further reduce growth, meaning that he might miss his target anyway, and would hardly endear him to voters already bruised by austerity. Thus, as the Times reports, Osborne, with David Cameron's agreement, "is ready to take a political hit on missing the target rather than face the "nightmare" of further cuts."

For the Chancellor, the consequences could be grim. The abandonment of the debt rule would dismay his party's fiscal conservatives, and could trigger the loss of the UK's AAA credit rating, the metric by which he has set such stock. But it could also offer Osborne one final chance to redeem himself. Once he accepts that debt reduction should not be prioritised over growth, the menu of policy options expands accordingly. Indeed, a  well-sourced leader (£) in yesterday's Times suggested that the Chancellor was even considering a small stimulus. And why not? With the UK able to borrow at the lowest interest rates for 300 years, it is only Osborne's political pride that has prevented a change of course thus far. Even the IMF has said that a reduced pace of deficit reduction would not lead to a rise in UK bond yields. Freed from his fiscal straitjacket, Osborne would finally be liberated to pursue a policy that works.

Chancellor George Osborne leaves 11 Downing Street in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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The Women's March against Trump matters – but only if we keep fighting

We won’t win the battle for progressive ideas if we don’t battle in the first place.

Arron Banks, UKIP-funder, Brexit cheerleader and Gibraltar-based insurance salesman, took time out from Trump's inauguration to tweet me about my role in tomorrow's Women’s March Conservative values are in the ascendancy worldwide. Thankfully your values are finished. . . good”.

Just what about the idea of women and men marching for human rights causes such ill will? The sense it is somehow cheeky to say we will champion equality whoever is in office in America or around the world. After all, if progressives like me have lost the battle of ideas, what difference does it make whether we are marching, holding meetings or just moaning on the internet?

The only anti-democratic perspective is to argue that when someone has lost the argument they have to stop making one. When political parties lose elections they reflect, they listen, they learn but if they stand for something, they don’t disband. The same is true, now, for the broader context. We should not dismiss the necessity to learn, to listen, to reflect on the rise of Trump – or indeed reflect on the rise of the right in the UK  but reject the idea that we have to take a vow of silence if we want to win power again.

To march is not to ignore the challenges progressives face. It is to start to ask what are we prepared to do about it.

Historically, conservatives have had no such qualms about regrouping and remaining steadfast in the confidence they have something worth saying. In contrast, the left has always been good at absolving itself of the need to renew.

We spend our time seeking the perfect candidates, the perfect policy, the perfect campaign, as a precondition for action. It justifies doing nothing except sitting on the sidelines bemoaning the state of society.

We also seem to think that changing the world should be easier than reality suggests. The backlash we are now seeing against progressive policies was inevitable once we appeared to take these gains for granted and became arrogant and exclusive about the inevitability of our worldview. Our values demand the rebalancing of power, whether economic, social or cultural, and that means challenging those who currently have it. We may believe that a more equal world is one in which more will thrive, but that doesn’t mean those with entrenched privilege will give up their favoured status without a fight or that the public should express perpetual gratitude for our efforts via the ballot box either.  

Amongst the conferences, tweets and general rumblings there seem three schools of thought about what to do next. The first is Marxist  as in Groucho revisionism: to rise again we must water down our principles to accommodate where we believe the centre ground of politics to now be. Tone down our ideals in the hope that by such acquiescence we can eventually win back public support for our brand – if not our purpose. The very essence of a hollow victory.

The second is to stick to our guns and stick our heads in the sand, believing that eventually, when World War Three breaks out, the public will come grovelling back to us. To luxuriate in an unwillingness to see we are losing not just elected offices but the fight for our shared future.

But what if there really was a third way? It's not going to be easy, and it requires more than a hashtag or funny t-shirt. It’s about picking ourselves up, dusting ourselves down and starting to renew our call to arms in a way that makes sense for the modern world.

For the avoidance of doubt, if we march tomorrow and then go home satisfied we have made our point then we may as well not have marched at all. But if we march and continue to organise out of the networks we make, well, then that’s worth a Saturday in the cold. After all, we won’t win the battle of ideas, if we don’t battle.

We do have to change the way we work. We do have to have the courage not to live in our echo chambers alone. To go with respect and humility to debate and discuss the future of our communities and of our country.

And we have to come together to show there is a willingness not to ask a few brave souls to do that on their own. Not just at election times, but every day and in every corner of Britain, no matter how difficult it may feel.

Saturday is one part of that process of finding others willing not just to walk a mile with a placard, but to put in the hard yards to win the argument again for progressive values and vision. Maybe no one will show up. Maybe not many will keep going. But whilst there are folk with faith in each other, and in that alternative future, they’ll find a friend in me ready to work with them and will them on  and then Mr Banks really should be worried.