Thursday, 27 January 2011
Osborne needs balls, but the last thing he needs is Balls
Watching Balls on the Daily Politics at lunchtime on the day the figures came out you saw the difference he makes. Andrew Neil pointed out (rightly) that the negative growth figures were not caused by the cuts, as the last quarter of 2010 saw public spending actually GROW by 5% to the largest amount ever. What Balls was able to do though was repeat his point about there not being a credible growth strategy and also bat away forcefully other economic points made (including showing his understanding of "Ricardian equivalence" - a flexing of his muscles to show the anti-Keynesians he's ready for them).
The fact is that we await April's figures with renewed interest, because if there is another fall in GDP then we have the double-dip recession that Labour have warned against for over a year now, and the effects for the Coalition's strategy could be far-reaching.
That doesn't mean these negative figures mean they should change course immediately - recovering from a recession as deep as the one we just had does usually involve some backward as well as forward steps. But it should cause pause for thought at least.
Most importantly, it renews the importance of communication. I'm convinced of the need to cut the deficit, but I am also convinced that economic growth can help to do that. I don't understand where this growth is going to come from. The fall of the pound has increased export demand for manufacturers (hence its growth) and loose monetary policy leading to low interest rates should help increase borrowing for investment (assuming banks actually are willing to lend money). But neither of these are in the control of the Coalition government.
So what are they doing? What is their growth strategy. Oh for a good Director of Communications........