What are Osborne's choices now?

The Chancellor can do what’s best for the economy or retain the support of the Tory party faithful. He cannot do both.

The original game plan for the Conservative-led coalition was fairly simple: to eliminate the structural deficit it had inherited within the five-year parliament and ride the global recovery back to economic growth. With that achieved, the Tories’ reputation for economic competence would be restored, promises to end austerity could be made, and a thumping Conservative majority in 2015 would be the just reward. Unfortunately that proved to be one of many over-optimistic projections.

With the Conservatives and Liberal Democrats now trailing Labour in opinion polls, George Osborne appears to face a difficult balancing act between nurturing a pallid economic recovery, maintaining the UK’s AAA credit rating, broadening support for the coalition’s policies, and cementing the loyalty of the Tory party faithful. It seems unlikely that all of these objectives can be achieved simultaneously.

Broadly speaking, the chancellor has three options. First, he could slow the pace of fiscal consolidation over and above simply allowing the "automatic stabilisers" to work, reducing the fiscal drag on the economy. Yet, 90 per cent of those who support the government believe the pace of tightening is about right, or could even be accelerated. With the coalition's austerity programme not even halfway complete, reversing course now would be an admission of failure, a sure-fire way of losing yet more support in the run-up to the 2015 general election.

Alternatively, the Chancellor could maintain the current timetable of austerity but look to spread the pain more broadly across society. Economically, this could make sense. ASR’s UK Household Finances Survey clearly illustrates that those on lower incomes are most insecure in their jobs and are experiencing the most significant financial pressures; shifting more of the burden onto those with broader shoulders could help to free up disposable income and support consumer spending. But again, this issue polarises opinion.

Finally, the Chancellor could look to stay the course and stick with the current strategy. This is not as simple as it sounds. As the Institute for Fiscal Studies has pointed out, another £27bn of cuts will need to be specified if the Chancellor is to meet his fiscal envelope. Assuming the coalition endorses the opinions advanced in the Household Finances Survey and maintains the sacrosanctity of the NHS and education, this would leave other departments facing unprecedented cuts of 16 per cent in real-terms during the three years to 2017-18 – areas such as the police, defence and transport. Such cuts look unviable and would prove unpopular. In other words, maintaining the status quo is a false option; the Chancellor will have to either inflict further pain on some segments of society or abandon his remaining fiscal targets before the next election in 2015.

Is there a third way? A boost to public investment notionally financed through the private sector seems like a possible method of fiscal support. This would achieve the multiple aims of supporting growth in the near-term, enhancing the supply-side of the economy and keeping debt off the public sector’s balance sheet. Already, the government plans to guarantee £40bn of loans to finance infrastructure projects, with projects worth £10bn already under consideration. Similar schemes, such as privately-contracted road pricing schemes, might also be considered.

Otherwise, this leaves the British government looking like Mr Micawber, simply hoping that "something will turn up". There are two potential saviours. The government could lean on the Bank of England further, adapting its mandate to provide additional monetary support above and beyond that consistent with its inflation target. At the very least, further rounds of Quantitative Easing look likely. Alternatively, the rest of the world could come to the UK's rescue. A global recovery – particularly one that spreads to the eurozone – would provide a source of demand where currently there is none. Ironically, the UK public’s growing hostility towards the EU comes at a time when it needs Europe more than ever.

Dominic White is chief European economist and Richard Mylles is a political risk analyst at Absolute Strategy Research

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

Dominic White is chief European economist and Richard Mylles is a political risk analyst at Absolute Strategy Research

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From Netflix to rented homes, why are we less interested in ownership?

Instead of owning things, we are renting experiences.

In 2008 the anthropologist Daniel Miller published a book based on an intimate study of 30 households on a single street in south London. The Comfort of Things ­explored the different kinds of relationships people have with what they own.

Miller described a retired couple’s house, cluttered with furniture, framed photographs and knick-knacks accumulated over decades. Down the road, a self-employed man called Malcolm had rented a flat. Malcolm preferred a spartan existence: he kept his belongings in storage, the better to travel at short notice, and conducted as much as possible of his life online. His home was his email address. His central material possession was his laptop.

Today, we are living more like the laptop warrior than the retired couple. Increasingly, our possessions are stored in the cloud or on a distant server. Just as we had grown accustomed to the idea of owning music in the form of data, we are now getting used to not owning it at all. In television, too, we stream instead of buy the latest drama series; when people use the term “box set” they are rarely referring to a box of discs on a shelf in the living room. Everything solid is melting into wifi.

Instead of owning things, we are renting experiences. The proliferation of mobile apps enables us to source or supply whatever we want, for short periods, more easily than ever before. The “sharing economy” is not about sharing, however. I encourage my three-year-old daughter to share her toys with her little brother; I don’t suggest that she charge him an hourly fee for doing so. A better name for it is the Paygo (pay-as-you-go) economy.

The Paygo economy combines two intertwined phenomena: the rise of renting and the decline of stuff. If you are in your twenties and unburdened by wealth you may already have accepted that you will always be in hock to a landlord. If you are in the market for a car, you will probably be thinking about leasing it, or joining a car club, or waiting until Google makes car ownership obsolete. There are even apps that allow you to rent a dog rather than take on the responsibility of owning one.

A world in which we own less and rent more is not necessarily one in which consumers are empowered. You never really own the electronic versions of a book or a film – you can’t lend them to a friend or sell them on – because the publisher retains its rights over them. Even our photos aren’t ours any longer: they are owned by corporations that scrape them for data that can be sold. In a recent article, the Financial Times journalist Izabella Kaminska argued that “ownership of nothing and the rental of everything represents . . . the return of an authoritarian and feudalistic society”.

The Paygo economy is changing our relationships with each other and with ourselves. Possessions form part of what the marketing academic Russell Belk calls “the extended self”. In Daniel Miller’s book, he describes how objects, however trivial, can embody relationships. Each household’s collection of stuff – tacky souvenirs, CDs we borrowed and never gave back – forms a constellation of personal significance. Post-materialism does not equate with spiritual enrichment. “Usually the closer our relationships with objects,” Miller writes, “the closer our relationships are with people.”

Human beings have a deep-seated tendency to imbue physical items with the ­essence of their owner. Hence the market for rock-star memorabilia: an old guitar that has been played by John Lennon is more valuable, and more revered, than a new replica that has not.

We apply this intuition even to money, the units of which are, by definition, interchangeable. Psychologists who study “essentialism” have found that people are less likely to recommend that stolen or lost cash be returned when it has subsequently been deposited in a bank account, as opposed to remaining in paper notes.

When things evaporate, so does ­meaning. A fetish for owning things connects to a yearning to retain a distinct identity in the face of change. Japan has been economically stagnant for decades and, as a result (and perhaps a cause), has preserved a set of idiosyncratic social norms, at odds with the rest of the developed world. One of these is a strong preference for owning music in a physical form: 85 per cent of the music bought in this technologically advanced society is on CD or vinyl. Japan is also the last developed country to rely on fax machines. A fax, unlike an email or the past, is something you can hold on to.

One way of framing the central arguments of British politics is that they are about the rights of owners versus renters – and not just in the sense of home ownership. Long-standing Labour members believe they own the party, and are outraged both by Momentum clicktivists and £3 voters. What appals many who voted Leave in the EU referendum is the thought that migrants can, in effect, rent a livelihood from the UK, treating the country as a giant Airbnb host. They want to know if this is still their country, or if they are now merely tenants of it.

Most younger voters chose Remain, but relatively few of them voted. That was a function of their lack of home ownership as much as age: millennials who rent are nearly half as likely to vote in elections as their peers who have managed to get on to the property ladder. This is partly a product of the mundane business of spending enough time in one place to get on the electoral roll, but it nonetheless suggests that renters form weaker bonds with the society in which they live.

For centuries, what we own has been an important way of placing ourselves in relation to those around us. The 18th-century curiosity cabinet was a collection of objects used to display the erudition and refinement of its owner. In the 20th century, houses became showcases. Your curtains, your car and your choice of decor said who you were or wanted to be. This was the era of what Thorstein Veblen called “conspicuous consumption”. In the Paygo economy, we will have fewer things of our own to ­display, as our possessions dematerialise and we rent more of what we need.

Despite all this, human nature has not changed: we are still apes with status anxiety, endlessly preoccupied by our position in any given hierarchy, eager for ways to convey our aspirations and allegiances. So we find other ways to signal. Rather than deploy what we own to say who we are, we use our photo streams and status updates to show it, even going so far as to arrange our meals and holidays with the aim of generating impressive on-brand content.

The vacuum of meaning opened up by the disappearance of stuff may even have increased the stridency of our political debate. One way I can let people know who I am is by loudly asserting my membership of a political tribe.

If I can’t show off my possessions, I will show off my beliefs.

Ian Leslie is the author of “Curious: the Desire to Know and Why Your Future Depends on It” (Quercus)

Ian Leslie is a writer, author of CURIOUS: The Desire to Know and Why Your Future Depends On It, and writer/presenter of BBC R4's Before They Were Famous.

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times