Why it’s time to start buying shares again in George Osborne’s political stock

by Stephen Tall on September 17, 2012

“Buy low, sell high” — the most important investing principle and the hardest to judge. So here’s my risky punt: time to buy shares in George Osborne. And here are my three reasons for doing so:

1) His stock can’t fall much lower.
The last six months has seen the Chancellor take a pummelling, falling from Tory hero to Tory zero. What he thought was his crowning moment of glory — cutting the top-rate of tax — turned into the infamous Budget omnishambles of granny/pasty/charity/caravan/church tax U-turns which shred his reputation for political acuity and basic competence. The Tory press turned on him and anointed Boris Johnson as David Cameron’s heir-apparent. And then he was booed at the Olympics. Put simply, it’s hard to see how it can get much worse. Which means that if/when it gets better the media’s pendulum-narrative will work in his favour: he will be the comeback kid.

2) Any economic recovery will see Osborne’s reputation recover.
It appears the UK economy may be crawling out of double-dip recession and income levels may rise for the first time in five years. If so, this changes the political narrative with George Osborne able to proclaim that he was the politician butch enough to tough it all out even as some of his supporters doubted his Plan A and Osborne’s resolve. That will be how the story is told by right-wing papers falling back in love with the Chancellor as they re-recognise him as one of their own.

(To avoid doubt, by the way, I think this will if it happens make Osborne very lucky on two counts. First, the arbitrary decision to try and eliminate the deficit in five years (specifically to slash capital spending) was a mistake. Secondly, there are no counter-factuals in politics so my labelling Osborne’s Plan A a mistake is entirely unprovable.)

3) The Tories are lucky to have Labour as their main opponents.
Labour was always going to have difficulty rescuing its reputation for economic credibility inside one parliament. Yet so scattergun have their attacks on Osborne’s Plan A been that Labour has left the Tories with an open goal at the next election. Assuming there is a recovery — however fragile and faltering, however much slower it is as a result of Osborne’s policies — Labour will be on the defensive. Eds Miliband and Balls have more or less written the Tory script for 2015: Labour plunged the economy into debt-fuelled crisis; we’ve started to repair the damage; now let us finish the job. It’s a powerful pitch and I see no sign that Labour will have any counter to it.