I am sick of folks ‘talking up’ George Osborne as if he is the oracle destined to be making the recovery decisions in the post-recession Britain. I guess its ok for lazy British talking heads to engage in the empty game, but for the respected director of the London School of Economics,
Howard Davies to say “George Osborne will quickly become one of the most unpopular chancellors in living memory – at least, for a while. That is the role history has in store for him, and it’s too late now to do anything about it”, I think is taking the joke too far!
It was even difficult for Davies to admit that the tough decisions taken by Gordon Brown/Alistair Darling is bearing fruit when he towed the Mervyn King’s theory that the signs that the economic decline has moderated, is partly as a result of what he called ‘the Honda effect’. In other words, he said, “if you close the plant down for six months and then re-open, it shows up as an increase in output, even if you only build one car a day”.
The fact is consumer spending has remained reasonably buoyant.
Howard Davies continued – on the poisoned chalice awaiting George Osborne in Number Eleven, in Management Today:
I do not find that very reassuring, however. Those of us lucky enough to remain in work have had a cashflow benefit from lower interest rates. Public-sector workers have seen their pay go up, too. As unemployment rises and wage increases stop (or even go into reverse), that impact will be offset.
So I expect no, or very low, growth through the next year, which will be a difficult background against which to begin the process of cutting public expenditure. Still, it will have to be done, and George Osborne will quickly become one of the most unpopular chancellors in living memory – at least, for a while. That is the role history has in store for him, and it’s too late now to do anything about it. Sell Osbornes short now is my advice, but be prepared to go long again in 2014, if he has stabilised things by then.
In the meantime, he’s enjoying himself, persuasively pinning all our economic ills on Gordon and his hapless, but admirably unflappable, chancellor. Given what awaits him in office, it is hard to begrudge Osborne his fun.
But he may find that commitments to reverse this and abolish that come back to haunt him. By late next year, shifting the desks of banking supervisors will be met by cries of ‘It’s the budget, stupid’, as the rating agency vultures circle the cadaver of our public finances. (That’s one metaphor too many. Stop now – Ed)