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.

Getty
Show Hide image

The dog at the end of the lead may be small, but in fact what I’m walking is a hound of love

There is a new, hairy face in the Hovel.

There is a new, hairy face in the Hovel. I seem to have become a temporary co-owner of an enthusiastic Chorkie. A Chorkie, in case you’re not quite up to speed with your canine crossbreeds, is a mixture of a chihuahua and a Yorkshire Terrier, and while my friend K— busies herself elsewhere I am looking after this hound.

This falls squarely into the category of Things I Never Thought I’d Do. I’m a cat person, taking my cue from their idleness, cruelty and beauty. Dogs, with their loyalty, their enthusiasm and their barking, are all a little too much for me, even after the first drink of the day. But the dog is here, and I am in loco parentis, and it is up to me to make sure that she is looked after and entertained, and that there is no repetition of the unfortunate accident that occurred outside my housemate’s room, and which needed several tissues and a little poo baggie to make good.

As it is, the dog thinks I am the bee’s knees. To give you an idea of how beeskneesian it finds me, it is licking my feet as I write. “All right,” I feel like saying to her, “you don’t have to go that far.”

But it’s quite nice to be worshipped like this, I have decided. She has also fallen in love with the Hovel, and literally writhes with delight at the stinky cushions on the sofa. Named after Trude Fleischmann, the lesbian erotic photographer of the Twenties, Thirties and Forties, she has decided, with admirable open-mindedness, that I am the Leader of the Pack. When I take the lead, K— gets a little vexed.

“She’s walking on a loose lead, with you,” K— says. “She never does that when I’m walking her.” I don’t even know what that means, until I have a think and work it out.

“She’s also walking to heel with you,” K— adds, and once again I have to join a couple of mental dots before the mists part. It would appear that when it comes to dogs, I have a natural competence and authority, qualities I had never, not even in my most deranged flights of self-love, considered myself to possess in any measurable quantity at all.

And golly, does having a dog change the relationship the British urban flâneur has with the rest of society. The British, especially those living south of Watford, and above all those in London, do not recognise other people’s existence unless they want to buy something off them or stop them standing on the left of the sodding escalator, you idiot. This all changes when you have a dog with you. You are now fair game for any dog-fancier to come up to you and ask the most personal questions about the dog’s history and genealogy. They don’t even have to have a dog of their own; but if you do, you are obliged by law to stop and exchange dog facts.

My knowledge of dog facts is scant, extending not much further beyond them having a leg at each corner and chasing squirrels, so I leave the talking to K—, who, being a friendly sort who could probably talk dog all day long if pressed, is quite happy to do that. I look meanwhile in a kind of blank wonder at whichever brand of dog we’ve just encountered, and marvel not only at the incredible diversity of dog that abounds in the world, but at a realisation that had hitherto escaped me: almost half of London seems to have one.

And here’s the really interesting thing. When I have the leash, the city looks at me another way. And, specifically, the young women of the city. Having reached the age when one ceases to be visible to any member of the opposite sex under 30, I find, all of a sudden, that I exist again. Women of improbable beauty look at Trude, who looks far more Yorkie than chihuahua, apart from when she does that thing with the ears, and then look at me, and smile unguardedly and unironically, signalling to me that they have decided I am a Good Thing and would, were their schedules not preventing them, like to chat and get to know me and the dog a bit better.

I wonder at first if I am imagining this. I mention it to K—.

“Oh yes,” she says, “it’s a thing. My friend P-J regularly borrows her when he wants to get laid. He reckons he’s had about 12 shags thanks to her in the last six months. The problems only arise when they come back again and notice the dog isn’t there.”

I do the maths. Twelve in six months! That’s one a fortnight. An idea begins to form in my mind. I suppose you don’t have to be a rocket scientist to work out what it is. But no. I couldn’t. Could I?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 28 April 2016 issue of the New Statesman, The new fascism