Today’s borrowing figures are a reminder of how poor the state of the public finances remains. The deficit for February stood at £9.3bn, £100m higher than in the same month last year. Borrowing for the year to date is £99.3bn and is forecast by the OBR to reach £108bn, £48bn higher than the figure planned by George Osborne in 2010. The man who promised to eliminate the structural deficit this year will now not do so until at least 2018.
Given all of this, one might expect the Conservatives to be suffering from Osborne’s failure, but the reverse is likely be the case. The larger the deficit is, the easier it is for the Tories to continue to present it as the defining economic issue and to argue that it’s not safe to hand the keys back to Labour. Despite Osborne repeatedly missing his borrowing targets (with the government forecast to borrow £190bn more than planned in 2010), the polls show that the Tories still enjoy a large lead in this area. The continuing black hole also means that Osborne and Cameron can run a classic 1992-style Conservative election campaign challenging Labour to say what taxes they would raise to plug the gap. Had the deficit already been eliminated, debate would likely have turned to how to spend the proceeds of growth, territory where Labour is traditionally strongest.
For Ed Miliband, the priority is to ensure that the cost of living (an area where Labour leads the Tories) remains the defining issue. But as Osborne desperately tries to overturn the opposition’s stubborn poll lead, the deficit remains one of his most valuable weapons.