The Friday column From a Labour perspective
â€œWe have an economic plan that is delivering for Britainâ€. When George Osborne uttered his familiar mantra in the Commons on Wednesday it sounded as though he was clinging to a piece of wreckage after his encounter with Angela Eagle.
The duo were standing in for their bosses as first secretary of state and his shadow, rather than in their day jobs as Chancellor and shadow Business Secretary. Questioned about the Cumbria flood the Osborne claimed â€œbbecause we have a strong and resilient economy, we are increasing the money we spend on our flood defences.â€
Eagle pointed out that the Chancellor had cut flood defence spending by Â£115 million this year and investment in flood defence would only protect 1 in 8 of those households at risk. Osborneâ€™s assertion about a â€œstrong and resilient economyâ€ went unchallenged. Prime Ministerâ€™s Questions isnâ€™t the forum for broad economic arguments.
But had Eagle wanted to contest Osborneâ€™s claim she would have some powerful ammunition from an interview on the Today Programme with John Longworth of the British Chambers of Commerce. The BCC had downgraded it growth forecast and Longworth was worried by the unbalanced economy with manufacturing weakening.
â€œItâ€™s driven by debt itâ€™s driven by assets and property, sending in money from overseas to fund property that we already own, is not actually a great idea in the long run and itâ€™s driven by consumer spending. What we really need is rebalancing whilst the sun shines.â€
Five years ago the Chancellor had talked of a â€œMarch of the Markersâ€ with the economy being rebalanced towards manufacturing, exports and the regions.
â€œNone of those things have actually transpired in practice yet,â€ said Longworth. â€œWe have record low interest rates, we have record low oil prices all of which favour economic growth. Manufacturing still accounts for half of our exports, you canâ€™t run a current account balance as it is at the moment forever. Because itâ€™s not without consequences, you have to sell assets to do that, which means weâ€™re asset selling the nation. Stripping off the family silver.â€
Longworth comments chime with the Labour charge that Osborne is failing on the economic fundamentals. They point to the productivity gap of around 20% between Britain and her industrial rivals and a failure to get major infrastructure projects started.
Labour argue that balancing the economy is the key to balancing the budget. Tackling the deficit through cuts means certain pain but no guarantee of gain. Remember Osborne set himself a target of eliminating the deficit by 2015. It is still around Â£70billion.
One sign of the unbalanced economy is the trade figures. According to the Office for National Statistics Britain was in the red in October by over Â£4 billion — the result of a 1.6% fall in exports of goods and services and a rise in imports of 5.6%. The figures are â€œwearyingly familiar,â€ says the Guardianâ€™s Larry Elliott.
â€œA widening trade deficit and a frothy housing market are signs that trouble is brewing.â€
Osborne has failed to fix the fundamentals of the economy and his much vaunted recovery, with the extra jobs and rising living standards, looks distinctly fragile.
That leaves two big questions. Will Osborneâ€™s luck hold? If it doesnâ€™t, and the Tories reputation for managing the economy crashes and burns as it did in 1992, will Labour be in a position to capitalise on the opportunity? Most Labour MPs think theyâ€™d be better able to do that with a different leader. Which is why there was such warm praise for Angela Eagle on Wednesday.