If George Osborne has a nightmare it is that the recovery for which he has waited so long will be seen to run out of steam before the election in 13 months’ time.
It is one thing to persuade the electorate that austerity has been worth it when the economy is surging forward; quite another to get their backing if it is once again languishing in the doldrums.
But there are many, the Governor of the Bank of England Mark Carney included, who worry that the buoyancy cannot last, unless it becomes more broadly based.
The glow from a recovering housing market has warmed other parts of the economy but that can only take us so far. The next step has to be significantly more business investment and substantial growth in exports.
When you wade through the welter of forecasts that is the reality you find — and it is a truth borne out by the Chancellor’s own creation, the Office for Budget Responsibility.
The numbers the OBR produced alongside the Budget highlight how the good times will get worse not better as the years roll on if we simply continue along our present course.
It forecasts GDP growth of 2.7% this year but only 2.3% next year and just 2.5% in 2018 — and all that on the assumption that there are no problems caused by Ukraine and other volatile regions elsewhere on Earth.
But Osborne said that growth alone would not get rid of the deficit, so the Chancellor announced that austerity and cuts will have to continue into the next parliament which he underlined with a proposed cap on welfare payments. This however sounded more like an elephant trap which he hoped Labour would oppose and fall into, rather than a genuine policy promise.
Osborne made much of the fall in unemployment and the number of new jobs being created but that is not his central problem.
He needs British companies to export more; he needs British companies to invest more and he needs the momentum which can be seen in London to spread to the rest of the country.
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Other governments invest far more in mentoring, in providing advice and support both at home and overseas, and being far more generous in providing export finance — Germany for example providing 10 times the amount of the UK. The UK, with Osborne at the helm, has too long been ideologically opposed to such help. But needs must, hence today’s focus on aid for exporters and his claim that he will provide the best export credit funding in Europe.
Likewise investment. Government-backed infrastructure projects, such as HS2, pictured, are talked about a lot but nothing much happens because the Treasury expects the private sector to come up with all the money, and the latter’s efforts to do so too often get snarled up in planning delays and political indecision. Again his solution was to reel off a string of initiatives but he put no government money where his mouth was.
More might come, however, from his efforts to encourage mainstream investment either by extending various capital and investment allowances with which businesses can offset the cost of new kit against tax, or by giving more clout to the various enterprise zones dotted around the country in the hope that they will become growth hotspots.
There is nothing wrong with such measures but why have we had to wait until Year Four of a five-year term for Government to bring them forward?
The need is great and obvious. In its four years, the Government has already borrowed more than Labour did in 13 years, and as the Chancellor confirmed today it plans to continue to borrow until 2018-19 at the earliest.