Labour and Tory MPs might disagree on the solutions to Britain’s economic woes but they increasingly agree on one thing: the eurozone crisis is not to blame. That’s bad news for George Osborne, who yesterday claimed in the Sunday Telegraph that Britain’s economic recovery was being “killed off” by the continent. Yet the eurozone, unlike Britain, is not officially in recession, so it’s largely erroneous to blame it for our double-dip. The collapse of economic growth (in the final quarter of 2010) pre-dated the current crisis. Rather, it was the inevitable consequence of Osborne’s austerity measures and his claim that Britain was on “the brink of bankruptcy”, a statement that had a chilling effect on consumer confidence
Tory MP Douglas Carswell led the charge against the Chancellor yesterday, declaring in a caustic blog post that “It is not the Eurozone crisis that we should blame for our awful economic performance, but the almost total absence of domestic economic reform, coupled with the Treasury’s absurd belief that monetary stimulus can engineer growth.” Switzerland, he noted, which does four times more trade with the Eurozone than we manage, grew at two per cent year-on-year in the first quarter of 2012.
Today he is joined by others from the party, with David Ruffley, an MP and member of the Treasury Select Committee, observing that “We can’t just say the eurozone is destroying confidence in the UK and nothing can be done”. Tory peer Michael Forsyth argues: “Of course market conditions are difficult but I think George really needs to address urgently are the tax burden. One of the reasons we are not getting growth is the level of the tax burden and degree of cost imposed on competitiveness by excessive regulation.”
While Labour argues for Keynesian stimulus and Tory MPs push for a supply-side revolution, the key is that neither now believes the status quo is tenable. That leaves Osborne, who often appears to have subcontracted the task of promoting growth to the Bank of England (“we are fiscal conservatives, but monetary activists,” he is fond of remarking), increasingly isolated. With his reputation as a political strategist also in free-fall after the Budget, it is now hard to find a Conservative MP with a good word to say about the man once touted as a future party leader. In particular, they are rightly infuriated by Osborne’s decision to join David Cameron’s US junket just a week before the Budget.
Unfortunately for Osborne, who is known in Westminster as “the submarine” for his habit of vanishing when the government is under-fire, he won’t be able to avoid scrutiny this week. He will appear at the Leveson inquiry this afternoon (following Gordon Brown’s appearance this morning), a chance to remind everyone just who hired Andy Coulson, and will deliver his annual Mansion House address on Thursday. If Osborne’s stock is not to plummet any further, then, for once, he will need to provide answers, not excuses.