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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Hillary Clinton can take down the Donald Trump bogeyman - but she's up against the real thing

Donald Trump still has time to transform. 

Eight years later than hoped, Hillary Clinton finally ascended to the stage at the Democratic National Convention and accepted the nomination for President. 

Like her cheerleaders, the Obamas, she was strongest when addressing the invisible bogeyman - her rival for President, Donald Trump. 

Clinton looked the commander in chief when she dissed The Donald's claims to expertise on terrorism. 

Now Donald Trump says, and this is a quote, "I know more about ISIS than the generals do"

No, Donald, you don't.

He thinks that he knows more than our military because he claimed our armed forces are "a disaster."

Well, I've had the privilege to work closely with our troops and our veterans for many years.

Trump boasted that he alone could fix America. "Isn't he forgetting?" she asked:

Troops on the front lines. Police officers and fire fighters who run toward danger. Doctors and nurses who care for us. Teachers who change lives. Entrepreneurs who see possibilities in every problem.

Clinton's message was clear: I'm a team player. She praised supporters of her former rival for the nomination, Bernie Sanders, and concluded her takedown of Trump's ability as a fixer by declaring: "Americans don't say: 'I alone can fix it.' We say: 'We'll fix it together.'"

Being the opposite of Trump suits Clinton. As she acknowledged in her speech, she is not a natural public performer. But her cool, policy-packed speech served as a rebuke to Trump. She is most convincing when serious, and luckily that sets her apart from her rival. 

The Trump in the room with her at the convention was a boorish caricature, a man who describes women as pigs. "There is no other Donald Trump," she said. "This is it."

Clinton and her supporters are right to focus on personality. When it comes to the nuclear button, most fair-minded people on both left and right would prefer to give the decision to a rational, experienced character over one who enjoys a good explosion. 

But the fact is, outside of the convention arena, Trump still controls the narrative on Trump.

Trump has previously stated clearly his aim to "pivot" to the centre. He has declared that he can change "to anything I want to change to".  In his own speech, Trump forewent his usual diatribe for statistics about African-American children in poverty. He talked about embracing "crying mothers", "laid-off factory workers" and making sure "all of our kids are treated equally". His wife Melania opted for a speech so mainstream it was said to be borrowed from Michelle Obama. 

His personal attacks have also narrowed. Where once his Twitter feed was spattered with references to "lying Ted Cruz" and "little Marco Rubio", now the bile is focused on one person: "crooked Hillary Clinton". Just as Clinton defines herself against a caricature of him, so Trump is defining himself against one of her. 

Trump may not be able to maintain a more moderate image - at a press conference after his speech, he lashed out at his former rival, Ted Cruz. But if he can tone down his rhetoric until November, he will no longer be the bogeyman Clinton can shine so brilliantly against.