Osborne's £12bn black hole

Without further cuts and tax rises, Osborne will likely miss his pledge to eliminate the structural

As the Lib Dems fight in Birmingham to emphasise their "distinctiveness", it's worth remembering that they and the Tories are at one on the need to stick to George Osborne's deficit reduction strategy. Like Cameron and Osborne, Clegg and Cable argue that the adoption of a "plan B" would trigger a dramatic loss of confidence in Britain and a rise in interest rates. As Clegg told Andrew Marr on Sunday: "Does anyone seriously think that by ripping up the plan to balance the books, that somehow you will create growth by next Tuesday? It is a complete illusion. Actually what you would create is outright market panic, higher interest rates and more unemployment."

The coalition has pledged to meet two fiscal targets by the end of this parliament - the elimination of the structural deficit and a reduced debt-to-GDP ratio. But lower-than-expected growth (as the graph below shows, forecasters have slashed their 2011 growth predictions), reduced tax revenues, and higher-than-expected unemployment means that both goals are in doubt. Osborne was forced to announce an extra £44.5bn of borrowing at the Budget in March and the economic picture has only darkened since.

Average of independent forecasts for 2011

A

Source: Treasury.

Today's FT offers confirmation of the Chancellor's woes. The paper replicated the model of government borrowing used by the OBR and found that the structural deficit (the part of the deficit that remains even after growth returns) is set to be £12bn higher-than-expected. Consequently, without further spending cuts and/or tax rises, it's likely that Osborne will miss his pledge to eliminate the structural deficit by 2014-15, and he may not even meet it in 2015-16. Judging by this prognosis, all thought of a pre-election "giveaway" should be abandoned. Indeed, austerity may well last into the next parliament. The FT notes that plugging the black hole at the next Budget would require the equivalent of raising VAT from 20 per cent to 22.5 per cent. But if I was Osborne I'd be more inclined to adopt a version of Vince Cable's "mansion tax" in addition to other taxes on property and land. Polls show strong public support for new wealth taxes.

Of course, Osborne and his allies will argue that all of this vindicates the government's approach. If even the coalition's austerity measures can't eliminate the structural deficit, how would Labour do? But the opposition, in the person of Ed Balls, will rightly reply that it was Osborne's decision to cut (and tax) too hard and too early, that led to reduced growth and, consequently, a slower pace of deficit reduction. The widening gap in the public finances could turn the fiscal debate on its head - and not a moment too soon.

George Eaton is political editor of the New Statesman.

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No, Jeremy Corbyn did not refuse to condemn the IRA. Please stop saying he did

Guys, seriously.

Okay, I’ll bite. Someone’s gotta say it, so really might as well be me:

No, Jeremy Corbyn did not, this weekend, refuse to condemn the IRA. And no, his choice of words was not just “and all other forms of racism” all over again.

Can’t wait to read my mentions after this one.

Let’s take the two contentions there in order. The claim that Corbyn refused to condem the IRA relates to his appearance on Sky’s Sophy Ridge on Sunday programme yesterday. (For those who haven’t had the pleasure, it’s a weekly political programme, hosted by Sophy Ridge and broadcast on a Sunday. Don’t say I never teach you anything.)

Here’s how Sky’s website reported that interview:

 

The first paragraph of that story reads:

Labour leader Jeremy Corbyn has been criticised after he refused five times to directly condemn the IRA in an interview with Sky News.

The funny thing is, though, that the third paragraph of that story is this:

He said: “I condemn all the bombing by both the loyalists and the IRA.”

Apparently Jeremy Corbyn has been so widely criticised for refusing to condemn the IRA that people didn’t notice the bit where he specifically said that he condemned the IRA.

Hasn’t he done this before, though? Corbyn’s inability to say he that opposed anti-semitism without appending “and all other forms of racism” was widely – and, to my mind, rightly – criticised. These were weasel words, people argued: an attempt to deflect from a narrow subject where the hard left has often been in the wrong, to a broader one where it wasn’t.

Well, that pissed me off too: an inability to say simply “I oppose anti-semitism” made it look like he did not really think anti-semitism was that big a problem, an impression not relieved by, well, take your pick.

But no, to my mind, this....

“I condemn all the bombing by both the loyalists and the IRA.”

...is, despite its obvious structural similarities, not the same thing.

That’s because the “all other forms of racism thing” is an attempt to distract by bringing in something un-related. It implies that you can’t possibly be soft on anti-semitism if you were tough on Islamophobia or apartheid, and experience shows that simply isn’t true.

But loyalist bombing were not unrelated to IRA ones: they’re very related indeed. There really were atrocities committed on both sides of the Troubles, and while the fatalities were not numerically balanced, neither were they orders of magnitude apart.

As a result, specifically condemning both sides as Corbyn did seems like an entirely reasonable position to take. Far creepier, indeed, is to minimise one set of atrocities to score political points about something else entirely.

The point I’m making here isn’t really about Corbyn at all. Historically, his position on Northern Ireland has been pro-Republican, rather than pro-peace, and I’d be lying if I said I was entirely comfortable with that.

No, the point I’m making is about the media, and its bias against Labour. Whatever he may have said in the past, whatever may be written on his heart, yesterday morning Jeremy Corbyn condemned IRA bombings. This was the correct thing to do. His words were nonetheless reported as “Jeremy Corbyn refuses to condemn IRA”.

I mean, I don’t generally hold with blaming the mainstream media for politicians’ failures, but it’s a bit rum isn’t it?

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

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