Cable warns of trouble ahead

Business Secretary refuses to rule out possibility of a double-dip recession.

A year on from the Spending Review, the coalition's soothsayer has emerged to offer another gloomy economic prognosis. Asked by ITV News whether he could promise that there wouldn't be a double-dip recession, Vince Cable replied: "I can't do that. We know conditions are very difficult but the government is doing the best it can to protect people." The Business Secretary spoke only of the "possibility" (hastily adding, "well indeed the certainty") that the coalition would turn things round.

It's not the first time that Cable has warned of a double-dip. In an interview with the Guardian's Decca Aitkenhead last August, he noted that the government's forecasts put the risk of a double-dip "at something like one in four, one in five" but he would only say "well below 50-50" (a figure that sounded rather higher than one in five). Then there was his interview with NS editor Jason Cowley, in which he spoke of the danger of another "financial bomb" going off.

As ever, there is something admirable about the Business Secretary's economic realism. But it prompts the question: what is he going to do about it? In some ways, the government has already adopted a plan B in the form of credit easing, accelerated deregulation and more QE by the Bank of England (described by George Osborne in 2009 as "the last resort of desperate governments when all other policies have failed"). The question remains whether it will change course again by temporarily slowing the cuts or offering further fiscal stimulus (a plan C, if you like). For now, there is no sign of that. But Osborne's Damascene conversion to quantitative easing is a reminder of how even this most stubborn of Chancellors can change his mind.

Announcing a second round of QE earlier this month, Bank of England governor Mervyn King remarked "When the world changes, we change our policy response." Cable's pessimism will only increase the pressure on Osborne to change his.

George Eaton is political editor of the New Statesman.

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Ignored by the media, the Liberal Democrats are experiencing a revival

The crushed Liberals are doing particularly well in areas that voted Conservative in 2015 - and Remain in 2016. 

The Liberal Democrats had another good night last night, making big gains in by-elections. They won Adeyfield West, a seat they have never held in Dacorum, with a massive swing. They were up by close to the 20 points in the Derby seat of Allestree, beating Labour into second place. And they won a seat in the Cotswolds, which borders the vacant seat of Witney.

It’s worth noting that they also went backwards in a safe Labour ward in Blackpool and a safe Conservative seat in Northamptonshire.  But the overall pattern is clear, and it’s not merely confined to last night: the Liberal Democrats are enjoying a mini-revival, particularly in the south-east.

Of course, it doesn’t appear to be making itself felt in the Liberal Democrats’ poll share. “After Corbyn's election,” my colleague George tweeted recently, “Some predicted Lib Dems would rise like Lazarus. But poll ratings still stuck at 8 per cent.” Prior to the local elections, I was pessimistic that the so-called Liberal Democrat fightback could make itself felt at a national contest, when the party would have to fight on multiple fronts.

But the local elections – the first time since 1968 when every part of the mainland United Kingdom has had a vote on outside of a general election – proved that completely wrong. They  picked up 30 seats across England, though they had something of a nightmare in Stockport, and were reduced to just one seat in the Welsh Assembly. Their woes continued in Scotland, however, where they slipped to fifth place. They were even back to the third place had those votes been replicated on a national scale.

Polling has always been somewhat unkind to the Liberal Democrats outside of election campaigns, as the party has a low profile, particularly now it has just eight MPs. What appears to be happening at local by-elections and my expectation may be repeated at a general election is that when voters are presented with the option of a Liberal Democrat at the ballot box they find the idea surprisingly appealing.

Added to that, the Liberal Democrats’ happiest hunting grounds are clearly affluent, Conservative-leaning areas that voted for Remain in the referendum. All of which makes their hopes of a good second place in Witney – and a good night in the 2017 county councils – look rather less farfetched than you might expect. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.