Balls set for revenge as Osborne faces new failure on the deficit and debt

The Chancellor will be forced to announce that the deficit will be higher this year and that the debt won't fall until 2018.

When George Osborne delivered his first Budget in June 2010, he declared: "Unless we deal with our debts, there will be no growth." But the Chancellor has learned that the reverse is true – unless you stimulate growth, you can't deal with your debts. In last year's Autumn Statement, he abandoned his target of reducing debt as a proportion of GDP by 2015-16, extending it until 2016-17. Today's FT reports that the Budget will see this ambition further delayed until 2017-18 as the OBR downgrades its growth forecasts for the fifth time since it was created. Growth in 2013 is now expected to be just half of the 1.2 per cent predicted in December. 

But worse for Osborne, as I've previously reported, is that he will be forced to announce, for the first time since entering the Treasury, that borrowing is expected to be higher this year than last. Until now, even as growth has disappeared, the Chancellor has been able to boast that the deficit "is falling" and "will continue to fall each and every year". But no more. Even with the addition of £2.3bn from the auction of the 4G mobile spectrum, borrowing will still be greater than last year. With just two months' worth of figures to go (the figures for February will be published on Thursday), the deficit is currently £5.3bn higher than in 2012. To ensure it falls, Osborne would need to borrow £23.4bn or less in February and March, compared to £28.6bn last year. As the OBR noted last month, "to meet our autumn forecast would now require much stronger growth in tax receipts in the last two months of the year than we have seen since December, or much lower-than-forecast expenditure by central or local government". Ed Balls, who was wrongfooted last year when Osborne unexpectedly announced that the deficit would continue to fall (it later became clear that the Chancellor had mischievously bagged the 4G receipts early), will have his revenge.

The combination of a shrinking economy and a rising deficit will add force to Labour's charge that austerity is "hurting but not working". Even Conservative MPs are beginning to ask what all the pain has been for if the national debt won't begin to fall until 2018. Osborne is expected to meet his fiscal mandate to eliminate the structural deficit but since this is "a rolling five year" target that aim also won't be achieved until 2017-18. The Tories, however, are confident that they can turn this failure to their advantage. First, they can argue that Labour's response would be to "borrow even more". Following Vince Cable's recent intervention in the New Statesman, which saw the Business Secretary urge the government to borrow to invest, Balls is more confident about making the case for deficit-financed stimulus but Osborne believes that the public won't accept the argument that you can "borrow more to borrow less". Keynes's paradox of thrift is just too paradoxical. 

Second, if the next election is again fought over austerity, the Tories will argue that they, not Labour, are the best choice to "finish the job". While polls show that voters believe the government is cutting "too far and too fast", Cameron and Osborne continue to be rated above Balls and Miliband for economic competence. With further deficit reduction required, the Tories' hope is that voters will turn to the original axemen. It's for this reason that Miliband is determined to define the election as a contest between two competing visions of society and the economy, rather than as a narrow contest over austerity. How successful he is in doing so will do much to determine its outcome. 

George Osborne leaves 11 Downing Street on February 27, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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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