Osborne will struggle to debate the IMF head-on

Without being able to turn to now-slain canards, the chancellor's arguments fall apart.

George Osborne is to make one of the most direct responses yet to the IMF's interventions into UK politics this week, according to the Guardian's economics editor Larry Elliot:

The Treasury intends to reject the IMF's call for an easing in the pace of deficit reduction and will insist that any change in the strategy is both unnecessary and counterproductive. Alarmed at the flatlining of the British economy in 2011 and 2012, the IMF said last month it was time for Osborne to do more to boost economic growth and urged that he should rethink plans to cut the government's structural budget deficit by 1% of national income in 2013-14.

The chancellor was stung by the criticism, which was seized upon by shadow chancellor Ed Balls as evidence the government had damaged the economy with an over-aggressive austerity approach.

It's an argument which the chancellor is ill-equipped to take public, since the IMF is pushing the one policy which Osborne has no real response to: apolitically arguing for a modest increase in deficit-funded investment.

Elliot reports that Treasury officials will be relying on the time-worn "credibility with the financial markets" response. That's one which might play well with the public, but has little-to-no relation to the real world. In fact, Britain's Bond yields are depressed, just like the rest of the non-Eurozone developed world's, by the financial climate. Investors, scared of the prospect that they might lose everything in another bank run or stock market collapse, buy up bonds in countries which control their own currency just to have a safe place to store money. The situation has even been called a "reverse sovereign debt crisis", to reflect that fact that, in many cases, yields are so low that governments are being effectively payed to look after money.

(The rush to safe assets is also likely what prompted Apple to issue its own $17bn worth of bonds; multinational companies are safe enough that investors are happy to park their cash there, too.)

The Chancellor and Treasury are more at easy arguing within the British political context, where the mantra "more debt is bad" is so ingrained into the debate that they don't have to try to justify it. That's why the Conservative party feels they can torpedo any of Labour's plans just by pointing out that they are aiming to "borrow more to borrow less" (despite the fact that that's an entirely reasonable suggestion, as anyone who has consolidated debts, installed double glazing, or taken a season ticket loan will tell you): the opposition flounders in the face of such an attack, unsure whether to argue that they aren't really borrowing; that they are borrowing, but it will result in less future debt; or that they are borrowing and that's better than the alternative.

The IMF has no such qualms. It is telling the UK that borrowing more is good, and challenging the government to actually go back to first principles and explain why its debt reduction program must take eight years, compared to the initial plan of five. Why not nine? Or ten? Or 12?

Faced with having to justify his most basic beliefs, the chancellor is forced to retreat to canards long since slain. The "financial markets" are not rewarding the UK for austerity, nor will they punish it for slowing the pace of fiscal consolidation. In the meantime, the UK economy is very definitely feeling the hit of the lack of any coherent plan for growth over the last three years; and it feels like that pain will last a lot longer.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Getty
Show Hide image

The Manchester attack will define this election: Broadcasters have a careful line to tread

It's right that the government should be given a chance to respond, but they must not be allowed to use it to campaign.

Every election campaign has its story, its place in the political history of this country. 2017 will forever be known for Manchester and the horror of the attack on Britain's young; and fighting terrorism will be a theme, overt or underlying, of what we see and hear between now and polling day.

The broadcasters have covered the events comprehensively yet sensitively. But they are aware that we're in an election campaign too; and when other news drives aside the carefully-balanced campaign formats, ministerial appearances give them a dilemma.

The fact is that what the Prime Minister and Home Secretary are doing in response to Manchester is newsworthy. It was Theresa May's duty to implement the recommendations of her security advisers on the elevation of the terror alert, and it would have been unthinkable for the news channels not to broadcast her various statements.

But it is also true that, if the bomb hadn't been detonated, Tuesday would have been a day in which the PM would have been under relentless damaging scrutiny for her u-turn on social care. All the opposition parties would have been in full cry across the airwaves. Yet in the tragic circumstances we found ourselves, nobody could argue that Downing Street appearances on the terror attack should prompt equal airtime for everyone from Labour to Plaid Cymru.

There are precedents for ministers needing to step out of their party roles during a campaign, and not be counted against the stopwatch balance of coverage. Irish terrorism was a factor in previous elections and the PM or Northern Ireland secretary were able to speak on behalf of the UK government. It applied to the foot and mouth epidemic that was occupying ministers' time in 2001. Prime ministers have gone to foreign meetings before, too. Mrs Thatcher went to an economic summit in photogenic Venice with her soulmate Ronald Reagan three days before the 1987 election, to the irritation of Neil Kinnock.

There are plenty of critics who will be vigilant about any quest for party advantage in the way that Theresa May and Amber Rudd now make their TV and radio appearances; and it’s inevitable that a party arguing that it offers strength and stability will not object to being judged against these criteria in extreme and distressing times.

So it's necessary for both broadcasters and politicians to be careful, and there are some fine judgements to be made. For instance, it was completely justifiable to interview Amber Rudd about the latest information from Manchester and her annoyance with American intelligence leaks. I was less comfortable with her being asked in the same interview about the Prevent strategy, and with her response that actions would follow "after June", which edges into party territory and would be a legitimate area to seek an opposition response.

When the campaigning resumes, these challenges become even greater. Deciding when the Prime Minister is speaking for the government and nation, or when she is leader of the Conservative Party, will never be black and white. But I would expect to see the broadcast bulletins trying to draw clearer lines about what is a political report and what is the latest from Manchester or from G7. They must also resist any efforts to time ministerial pronouncements with what's convenient for the party strategists' campaign grid.

There might also usefully be more effort to report straight what the parties are saying in the final days, with less spin and tactical analysis from the correspondents. The narrative of this election has been changed by tragedy, and the best response is to let the politicians and the public engage as directly as possible in deciding what direction the nation should now take.

Roger Mosey is the Master of Selwyn College, Cambridge. He was formerly editorial director and the director of London 2012 at the BBC.

0800 7318496