Will Cameron's five nightmares come true?

Defeat in Eastleigh, a higher deficit, a triple-dip recession, poor local election results and the loss of Britain's AAA rating could prompt a new revolt by Tory MPs.

At the start of this month, the Evening Standard reported that Tory rebels had set David Cameron five challenges: victory in the Eastleigh by-election, a successful Budget, a return to economic growth, a strong performance in the county council elections and the retention of the UK's AAA credit rating. A few weeks on, what are the PM's chances of success looking like?

1. Eastleigh by-election: preparing for defeat

The Tories already appear resigned to defeat in Eastleigh, where the Lib Dems' local advantage - they hold all 36 council seats in the constituency - has given them the edge. Victory for "the yellow bastards" means it will be even harder for Cameron to argue that a Conservative majority is achievable in 2015. The party has included 20 Lib Dem MPs on its target list of 40 in the hope that they will prove easier to dislodge than their Labour counterparts, but Eastleigh suggests that Clegg's party will benefit from a significant incumbency advantage. The Lib Dems' plan to treat the general election as "57 by-elections" looks increasingly smart. 

2. The Budget: Osborne faces failure on the deficit

The pressure on George Osborne to deliver a "game changing" Budget has never been greater and will reach a new peak if the Tories lose in Eastleigh next Thursday. After growth of just 0.4 per cent since the Spending Review in October 2010, Conservative MPs are demanding shock-and-awe tax cuts. Graham Brady, the chairman of the backbench 1922 Committee, has called for the abolition of Air Passenger Duty; others demand the suspension of capital gains tax and a reduction in corporation tax to an Irish-style level of 11 per cent.

But the problem for the Chancellor is that as Tory calls for action have grown, his room for manoeuvre has shrunk. After no growth in 2012, there's precious little spare money in the Treasury. When Osborne steps up to the despatch box on 20 March, he'll almost certainly be forced to announce that the deficit is expected to be higher this year than last.

Until now, even as he's repeatedly missed his borrowing targets, the Chancellor has at least been able to boast that the deficit has continued to fall each year. 'It's taking longer than we thought but we're still heading in the right direction' has been his mantra. But that's about to change. Even with the addition of the £2.3bn proceeds from the 4G spectrum auction, the OBR will likely forecast a deficit for 2013 in excess of the £121bn recorded in 2012. With just two months of the financial year remaining, borrowing is £5.3bn (5.8 per cent) higher than in the same period last year. Osborne, one Tory MP tells me, will have "the worst of both worlds": no growth and a rising deficit.

3. Triple-dip recession: still on the table

After the economy shrunk by 0.3 per cent in the final quarter of 2012, the UK is in danger of suffering its first-ever triple dip recession. And while most economists expect us to (just) avoid this fate (NIESR is forecasting growth of 0.2 per cent in the first quarter), last week's worse-than-expected retail figures, the weakest for three years, led to warnings that a triple-dip was still "on the table". Rob Wood, an economist at Berenberg Bank, said: "The underlying picture is that the economy is bouncing along the bottom, so weather disruptions can easily tip it into negative territory." 

The Office for National Statistics will publish its first estimate of Q1 GDP on 26 April, six days before the county council elections. 

4. County council elections: will the Tory vote hold up?

On paper, the county council elections should give Cameron the least cause for concern. As Tom Watson, Labour's campaign co-ordinator, told me yesterday: "It's shire elections in their heartlands. It's May 2014 that will be their big test." But with local Conservative associations reporting mass resignations over equal marriage and Ukip still polling strongly, the Tory vote could still take a battering. 

5AAA rating: increasingly at risk

The rising deficit means at least one of the big three credit rating agencies - Moody's, Fitch and Standard & Poor's - is likely to strip the UK of its AAA rating this year. All three have already put Britain on "negative outlook" after anaemic growth forced Osborne to borrow £212bn more than planned. 

The loss of our AAA rating would, as I've written before, be of little economic significance. The US and France have seen no significant rise in their borrowing costs since losing their AAA ratings and there's little reason to believe Britain would be any different. All the evidence we have suggests that the market is prepared to lend to countries that can borrow in their own currencies, such as the US, the UK and Japan, and that enjoy the benefits of an independent monetary policy, regardless of their credit ratings or their debt levels.

But for Osborne, the politics of losing AAA would be toxic. Both before and after entering the Treasury, he chose to make our credit rating the ultimate metric of economic stability. When Britain was first put on negative outlook by S&P in May 2009, Osborne declared:

It's now clear that Britain's economic reputation is on the line at the next general election, another reason for bringing the date forward and having that election now ... For the first time since these ratings began in 1978, the outlook for British debt has been downgraded from stable to negative.

And when the UK was taken off negative watch by S&P in October 2010, he boasted of "a big vote of confidence in the UK, and a vote of confidence in the coalition government's economic policies". By his own logic, then, the loss of AAA would amount to a vote of no confidence in his economic policy. 

For political purposes, Osborne used Britain's credit rating as a stick to beat Labour with. He can hardly complain if others now use this move against him. The hunter has become the hunted.

David Cameron holds a Q&A session with workers as he campaigns for the forthcoming by-election in Eastleigh. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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The strange death of boozy Britain: why are young people drinking less?

Ditching alcohol for work.

Whenever horrific tales of the drunken escapades of the youth are reported, one photo reliably gets wheeled out: "bench girl", a young woman lying passed out on a public bench above bottles of booze in Bristol. The image is in urgent need of updating: it is now a decade old. Britain has spent that time moving away from booze.

Individual alcohol consumption in Britain has declined sharply. In 2013, the average person over 15 consumed 9.4 litres of alcohol, 19 per cent less than 2004. As with drugs, the decline in use among the young is particularly notable: the proportion of young adults who are teetotal increased by 40 per cent between 2005 and 2013. But decreased drinking is not only apparent among the young fogeys: 80 per cent of adults are making some effort to drink less, according to a new study by consumer trends agency Future Foundation. No wonder that half of all nightclubs have closed in the last decade. Pubs are also closing down: there are 13 per cent fewer pubs in the UK than in 2002. 

People are too busy vying to get ahead at work to indulge in drinking. A combination of the recession, globalisation and technology has combined to make the work of work more competitive than ever: bad news for alcohol companies. “The cost-benefit analysis for people of going out and getting hammered starts to go out of favour,” says Will Seymour of Future Foundation.

Vincent Dignan is the founder of Magnific, a company that helps tech start-ups. He identifies ditching regular boozing as a turning point in his career. “I noticed a trend of other entrepreneurs drinking three, four or five times a week at different events, while their companies went nowhere,” he says. “I realised I couldn't be just another British guy getting pissed and being mildly hungover while trying to scale a website to a million visitors a month. I feel I have a very slight edge on everyone else. While they're sleeping in, I'm working.” Dignan now only drinks occasionally; he went three months without having a drop of alcohol earlier in the year.

But the decline in booze consumption isn’t only about people becoming more work-driven. There have never been more alternate ways to be entertained than resorting to the bottle. The rise of digital TV, BBC iPlayer and Netflix means most people means that most people have almost limitless choice about what to watch.

Some social lives have also partly migrated online. In many ways this is an unfortunate development, but one upshot has been to reduce alcohol intake. “You don’t need to drink to hang out online,” says Dr James Nicholls, the author of The Politics of Alcohol who now works for Alcohol Concern. 

The sheer cost of boozing also puts people off. Although minimum pricing on booze has not been introduced, a series of taxes have made alcohol more expensive, while a ban on below-cost selling was introduced last year. Across the 28 countries of the EU, only Ireland has higher alcohol and tobacco prices than the UK today; in 1998 prices in the UK were only the fourth most expensive in the EU.

Immigration has also contributed to weaning Britain off booze. The decrease in alcohol consumption “is linked partly to demographic trends: the fall is largest in areas with greater ethnic diversity,” Nicholls says. A third of adults in London, where 37 per cent of the population is foreign born, do not drink alcohol at all, easily the highest of any region in Britain.

The alcohol industry is nothing if not resilient. “By lobbying for lower duty rates, ramping up their marketing and developing new products the big producers are doing their best to make sure the last ten years turn out to be a blip rather than a long term change in culture,” Nicholls says.

But whatever alcohol companies do to fight back against the declining popularity of booze, deep changes in British culture have made booze less attractive. Forget the horrific tales of drunken escapades from Magaluf to the Bullingdon Club. The real story is of the strange death of boozy Britain. 

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.