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.

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Progressive voters must ditch party differences to gain a voice in Brexit Britain

It's time for politicians and activists to put aside their tribal loyalties.

The status quo has broken. British politics lies shattered into pieces, and even Brexiteers look stunned. We are in a new landscape. Anyone who tells you they have the measure of it is lying; but anyone reaching for old certainties is most likely to be wrong.
 
Through this fog, we can already glimpse some signposts. There will be a leadership election in the Tory Party within three months. While it is still unclear who will win, the smart money is on a champion of Brexit. The Leave camp are in the ascendancy, and have captured the hearts of most Tory members and voters.
 
The next Conservative prime minister will lack a clear mandate from voters, but will need one to successfully negotiate our exit from the EU. They will also see a golden opportunity to capture the working-class Leave vote from Labour – and to forge an even more dominant Conservative electoral coalition. UKIP too would fancy their chances of dismembering Labour in the north; their financier Arron Banks now has almost a million new registered supporters signed up through Leave.EU.
 
In this context, it seems inevitable that there will be another general election within six to twelve months. Could Labour win this election? Split, demoralised and flailing, it has barely begun to renew, and now faces a massive undertow from its heartlands. In this time of crisis, a party divided will find it difficult to prevail – no matter who leads it. And amidst all today’s talk of coups against Corbyn, it is currently tough to envisage a leader who could unite Labour to beat the Brexiteers.  
 
From opposite ends of the political spectrum, I and my Crowdpac co-founder Steve Hilton have been testing the possibilities of new politics for years. In this referendum I supported Another Europe Is Possible’s call to vote In and change Europe. But it is crystal clear that the Leave campaigns learnt many of the lessons of new politics, and are well positioned to apply them in the months and years to come. I expect them to make significant use of our platform for crowdfunding and candidate selection.

Time to build a progressive alliance

On the other side, the best or only prospect for victory in the onrushing general election could be a broad progressive alliance or national unity platform of citizens and parties from the centre to the left. Such an idea has been floated before, and usually founders on the rocks of party tribalism. But the stakes have never been this high, and the Achilles heels of the status quo parties have never been so spotlit.
 
Such an alliance could only succeed if it embraces the lessons of new politics and establishes itself on open principles. A coalition of sore losers from Westminster is unlikely to appeal. But if an open primary was held in every constituency to select the best progressive candidate, that would provide unprecedented democratic legitimacy and channel a wave of bottom-up energy into this new alliance as well as its constituent parties.
 
In England, such an alliance could gather together many of those who have campaigned together for Remain in this referendum and opposed Tory policies, from Labour to Greens and Liberal Democrats. It might even appeal to Conservative voters or politicians who are disenchanted with the Leave movement. In Scotland and Wales too, some form of engagement with the SNP or Plaid Cymru might be possible.
 
An electoral alliance built on open and democratic foundations would provide a new entry point to politics for the millions of young people who voted to stay in the EU and today feel despairing and unheard. Vitally, it could also make a fresh offer to Labour heartland voters, enabling them to elect candidates who are free to speak to their concerns on immigration as well as economic insecurity. I believe it could win a thumping majority.

A one-off renegotiation force

A central goal of this alliance would be to re-negotiate our relationship with Europe on terms which protect our economy, workers’ rights, and the interests of citizens and communities across the country. Work would be needed to forge a common agenda on economic strategy, public services and democratic reform, but that looks more achievable than ever as of today. On more divisive issues like immigration, alliance MPs could be given flexibility to decide their own position, while sticking to some vital common principles.
 
This idea has bubbled to the surface again and again today in conversations with campaigners and politicians of different parties and of none. What’s more, only a new alliance of this kind has any prospect of securing support from the new network movements which I helped to build, and which now have many more members than the parties. So this is no idle thought experiment; and it surely holds out greater hope than another rearranging of the deckchairs in the Parliamentary Labour Party.
 
The alliance would probably not last in this form beyond one parliamentary term. But during that time it could navigate us safely through these turbulent referendum seas, and lay foundations for a better country and a better politics in the coming decades. Food for thought, perhaps.
 
Paul Hilder is co-founder of Crowdpac, 38 Degrees and openDemocracy. He has played leadership roles at Change.org, Avaaz and Oxfam, and was a candidate for general secretary of Labour in 2011. 

Paul Hilder is an expert on new politics and social change. He is the Executive Director of Here Now, a movement lab working with partners around the world. He co-founded 38 Degrees and openDemocracy, helped launch Avaaz.org and served as Vice-President of Global Campaigns at Change.org. He has worked on social change in the UK and around the world, including in the political arena and with Oxfam and the Young Foundation.