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.