Leader: George Osborne: what is your plan B?

The complacency of the political classes may yet send Britain into a depression.

It is official: we are mired in the longest recession since modern records began at the end of the Second World War. National output has now fallen for the sixth successive quarter. House prices continue to fall as more people are plunged into negative equity. Unemployment is rising, banks are not lending and the mood in the country at large is one of paranoia and suspicion - hence the surge of attention for the British National Party and the issue of the rights and wrongs of immigration.

Our economics columnist, Professor David Blanchflower, a former member of the Monetary Policy Committee of the Bank of England, has long warned that this recession is far from over. He has consistently been the lone voice of sanity and scepticism throughout the crisis. Meanwhile, City economists and commentators have been predicting recovery, as indeed has the Chancellor, Alistair Darling. They have been wrong: the recovery has not happened.

More wrong still have been the Conservatives, whose economic policies have been as ill-informed as they have been gauche and naive. They have opposed interventionist government and fiscal and monetary stimuli. They have opposed quantitative easing. They have opposed the cut in VAT. They have opposed more government spending. They are obsessed with the growing Budget deficit and advocate paying down debt and cutting public spending, here and now, with immediate effect. True to their Thatcherite inheritance, they have announced that the management of the economy should be through interest rates alone, in defiance of all other mainstream political parties in western Europe.

Given these latest figures, notably the fall of 0.4 per cent in GDP for the third quarter of 2009, it is worth asking the shadow chancellor, George Osborne (since he has opposed all that the government has done), what his plan B is. Mr Osborne is a skilful politician, with a flair for rhetoric and the easy headline - the latest example being his opportunistic statements on curtailing bankers' bonuses, something that could be achieved only through concerted international co-operation. The only economic plan he seems to have is for attempting to balance the books. He does not have a plan for growth. He has a plan for a lack of growth.

Prof Blanchflower has predicted that a Conservative government committed to spending cuts at all costs could push the British economy into a "death spiral of decline". He has warned ominously of as many as five million unemployed and three million homeowners in negative equity. That would be a depression every bit as terrible as the 1930s.

Those who aspire to government should read J K Galbraith's The Great Crash. The echoes with today are unsettling. In the 1930s, world governments cut back on stimulus too soon, with catastrophic consequences. The result was what economists call a double-dip recession, with an intensification of hardship just as optimism was returning.

Politicians in Britain, on both sides, seem desperate to underplay the severity of the present crisis, perhaps because they do not wish to alarm the electorate or diminish confidence even more. The complacency of the political classes - Labour's hasty boasts of recovery, the Tories' opportunistic posturing on debt - may yet send the British economy plunging over a cliff into the depression we have so far avoided through determined and necessary interventionism.

This England: the debate

We are grateful to all of you who have written or emailed to congratulate us on the redesign of the magazine. If there have been complaints, they have been about the discontinuation of our This England column. Through its long history, the New Statesman has absorbed many rival publications, including, most recently, New Society in 1988 and Marxism Today in 1991. In 1931, following the appointment of Kingsley Martin as editor the previous year, we took over the Nation and Athenaeum and, two years later, the Weekend Review, from which we inherited two new regular columns, "This England" and "Weekend Competition". Even five years ago, This England (and, occasionally, This Scotland and This Wales) still attracted large numbers of entries each week. However, because fewer and fewer entries were arriving in the post, we decided, reluctantly, to bring the column to an end. (The fall in entries may be related to the decline of regional and local newspapers in the internet age.) But as we have stated on our correspondence pages in recent weeks, we are happy to reintroduce This England, but we need help from you, the readers. Please send in those snippets from local newspapers and magazines as well as the web that, unintentionally or otherwise, expose something of what it means to be English. This England will return, but only when you make it happen.

This article first appeared in the 02 November 2009 issue of the New Statesman, Mob rule