Why Osborne should welcome Cable's pessimism

The dangers of an unbalanced recovery are real and excessive boastfulness could encourage voters to believe it is safe to return Labour to power.

Whenever the coalition appears to be enjoying a run of good economic news, (inflation down to 2 per cent, unemployment down to 7.1 per cent, reduced government borrowing), Vince Cable can be relied upon to pour cold water on the green shoots. In a lecture last night at the Royal Economic Society, the Eeyorish Business Secretary warned that weak exports, low investment and falling productivity meant that "the recovery could be short-lived" and that it had "not been all we might have hoped for" (indeed, GDP remains 2 per cent below its pre-recession peak and average wages are still falling). He added: "We cannot risk another property-linked boom-bust cycle which has done so much damage before, notably in the financial crash in 2008." 

Ahead of the release at 9:30am of the ONS's first estimate of GDP growth in the fourth quarter of 2013 (expected to show that output rose by around 0.8 per cent and perhaps as much as 1 per cent), David Cameron and George Osborne could be forgiven for cursing his pessimism. If Labour has been forced to concede that a recovery is underway, it can at least complain, echoing Cable, that it is the wrong kind of recovery; one too reliant on debt-led consumer spending and house price inflation, rather than investment and exports. 

But for two reasons, Cameron and Osborne should welcome the Business Secretary's hard truths. The first is that he is entirely right to warn about the dangers of an unbalanced recovery. The game of politics means that there is always a temptation for ministers to encourage excessive optimism in defiance of underlying trends. Had more warned of the fragility of the economy before the crash, Britain would be in a better position than it is now.  

The second is that it is politically dangerous for the Tories to indulge in anything resembling boastfulness. Average living standards, contrary to what they claimed last week, are still falling and global threats to the recovery (the unresolved euro crisis, the unwinding of monetary stimulus in the US, the slowdown in China) remain. And those are just the ones we know about. If the crash has taught us anything, it is to always be prepared for "black swan" events. At any moment, growth could be snuffed out.

Alternatively, should the recovery prove sustainable, the Tories risk giving the impression that, now the storm has passed, voters can afford to change captain and return "profligate" Labour to power. In his speech last night, Cable echoed Churchill in 1942 and suggested that the recovery was at "the end of the beginning rather than the beginning of the end." The Tories would be wise to do the same. Should they fail to do so, they risk suffering the same fate as Churchill in 1945, when voters decided that the man who won the war was not the man to win the peace. 

For most of the period since growth returned, the Tories have struck the right balance between claiming credit for the recovery (extending their poll lead on the economy and increasing consumer confidence) without appearing carelessly complacent. Osborne's warning that the job is "not even half done" (we'll definitely need that second term) is a particularly shrewd line. But there have been notable lapses; the declaration that living standards are rising (easily spun by Labour as "you've never had it so good") was the worst yet. To these moments of irrational exuberance, Jeremiah Cable's words are a vital corrective. 

Business Secretary Vince Cable warned that "the recovery could be short-lived".

George Eaton is political editor of the New Statesman.

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Commons Confidential: Dave's picnic with Dacre

Revenge is a dish best served cold from a wicker hamper.

Sulking David Cameron can’t forgive the Daily Mail editor, Paul Dacre, for his role in his downfall. The unrelenting hostility of the self-appointed voice of Middle England to the Remain cause felt pivotal to the defeat. So, what a glorious coincidence it was that they found themselves picnicking a couple of motors apart before England beat Scotland at Twickenham. My snout recalled Cameron studiously peering in the opposite direction. On Dacre’s face was the smile of an assassin. Revenge is a dish best served cold from a wicker hamper.

The good news is that since Jeremy Corbyn let Theresa May off the Budget hook at Prime Minister’s Questions, most of his MPs no longer hate him. The bad news is that many now openly express their pity. It is whispered that Corbyn’s office made it clear that he didn’t wish to sit next to Tony Blair at the unveiling of the Iraq and Afghanistan war memorial in London. His desire for distance was probably reciprocated, as Comrade Corbyn wanted Brigadier Blair to be charged with war crimes. Fighting old battles is easier than beating the Tories.

Brexit is a ticket to travel. The Independent Parliamentary Standards Authority is lifting its three-trip cap on funded journeys to Europe for MPs. The idea of paying for as many cross-Channel visits as a politician can enjoy reminds me of Denis MacShane. Under the old limits, he ended up in the clink for fiddling accounts to fund his Continental missionary work. If the new rule was applied retrospectively, perhaps the former Labour minister should be entitled to get his seat back and compensation?

The word in Ukip is that Paul Nuttall, OBE VC KG – the ridiculed former Premier League professional footballer and England 1966 World Cup winner – has cold feet after his Stoke mauling about standing in a by-election in Leigh (assuming that Andy Burnham is elected mayor of Greater Manchester in May). The electorate already knows his Walter Mitty act too well.

A senior Labour MP, who demanded anonymity, revealed that she had received a letter after Leicester’s Keith Vaz paid men to entertain him. Vaz had posed as Jim the washing machine man. Why, asked the complainant, wasn’t this second job listed in the register of members’ interests? She’s avoiding writing a reply.

Years ago, this column unearthed and ridiculed the early journalism of George Osborne, who must be the least qualified newspaper editor in history. The cabinet lackey Ben “Selwyn” Gummer’s feeble intervention in the Osborne debate has put him on our radar. We are now watching him and will be reporting back. My snouts are already unearthing interesting information.

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution