by Stephen Tall on January 30, 2010
A moment of sympathy, please, for Tory leader David Cameron as he tries to steer a middle ground as the UK falteringly exits recession.
On the one hand, he needs to keep happy his shadow chancellor George Osborne and the die-hard right-wingers at ConservativeHome who are desperate to start cutting public spending now:
Spending cuts need to be extensive and immediate. … We also need to get the pain out of the way as quickly as possible. Waiting until Years 2 or 3 of any Conservative government to cut spending will harm the chances of re-election.
And on the other hand, there is common sense and financial reality, which says don’t cut public spending too soon or else risk triggering a double-dip recession – something Mr Cameron seems to understand, but be reluctant to act on for fear of upsetting his party. As the Financial Times reports:
David Cameron was accused on Friday of watering down his promise that a Conservative government would make early cuts to Britain’s £178bn deficit, after he said that savings this year would not be “particularly extensive”. Mr Cameron’s softer tone reflects anxiety among Tory MPs that his aggressive deficit reduction rhetoric could backfire in the election campaign. …
… the Tories have always been vague on how far they would cut spending in the next financial year, other than to say they would spend less than Labour. Mr Cameron’s comments suggest he is sensitive to allegations that early Tory cuts could hit the fragile recovery, with growth just 0.1 per cent in the final quarter of 2009.
“Early action doesn’t have to be particularly extensive, but it’s got to be early,” he told an audience of British business leaders at the Swiss ski resort.
Lib Dem shadow chancellor Vince Cable was quick to note the mixed-messages being given off by the Tories:
The Tories’ confused statements about cuts show that they don’t really know what to do about the economy. In their desperation to sound tough on public spending, the Tories didn’t take economic reality into account.
“It is of course necessary to cut public spending but this must be done calmly and rationally when the economy is strong enough to cope with it. The economy remains dependent on artificial money creation and a Government running a massive deficit, but with growth of just 0.1%, immediately slashing government spending would be disastrous.
“Our economy is too reliant on consumer spending and debt and a failing financial services industry. A lasting and sustainable recovery can only be achieved if we correct these fundamental imbalances.”
The Tories are – potentially – just three months from forming the next government. Their economic cluelessness really is quite frightening. Discuss …