Autumn Statement: is recovery a vote-winner or built on sand?
George Osborne declares that economic plan is working - but political observers are not so sure
THE Chancellor unveiled optimistic forecasts for the British economy in yesterday's Autumn Statement, but not everybody was convinced by his speech. Some political commentators say George Osborne has coined the Tory slogan for the next election: "Britain's moving again - let's keep going". But others say the recovery is not what it seems...
The Guardian What a thrill to come to the Commons and paint a picture somewhat brighter than forecast, says today's Guardian editorial. But the substance of Osborne's statement hardly suggests that he is yet writing the rules of the game. "It revealed a nervous chancellor, grabbing, twisting and modifying ideas from his opponents," says the newspaper. Annual borrowing is still running at £111bn, compared with the £60bn that Osborne had originally pencilled in for this year. "More fundamentally, faith in the economy's governance will not be restored while the recovery is not being felt in most homes." The return of wage growth was pushed back by another year, with the average worker now in for 15 lost years, it adds. "Recovery or not, Mr Osborne will not really regain his swagger until he can do something about that."
Daily Telegraph Osborne's recovery is "built on sand", says the Daily Telegraph's Jeremy Warner. "Of course it is good news that the economy is growing much more quickly than most thought likely a year ago, yet there is also a sense in which this is only growth borrowed from the future." Without fundamental change to improve the productive potential of the economy, and cure it of its addiction to consumption, it will merely peter out, says Warner. "For the time being, growth is back. But from productivity and dysfunctional energy policy to structural reform and public spending, the challenges remain as daunting as ever."
Financial Times Six years after the start of the crisis, the UK economy is yet to recover its pre-crisis peak, points out Martin Wolf in the Financial Times. According to the Office for Budgetary Responsibility, that will occur in 2014. Yet, even then, the economy will be a mere 0.6 per cent larger than seven years earlier, the "slowest recovery in more than a century", says Wolf. The government's job was to restore the economy to health as quickly as possible, thereby minimising long-term damage. "It failed to do so," says Wolf. "The fact that growth has returned is good news. But this cannot vindicate a strategy that has tolerated such large long-term losses."
The Times With the notable and important exception of pensions, the coalition is "playing the long game very poorly", says Philip Collins in The Times. Britain needs more investment, the decline of which could yet be the coalition's damaging legacy. There is a reliable link between productivity growth and rates of investment, so it is therefore "worrying in the extreme" that over the past five years investment has dropped in real terms by a quarter. "Mr Osborne likes the half-truth that austerity is the price we are paying for Labour's profligacy," says Collins, "but lack of investment is now the price we are paying for Mr Osborne's austerity."
The Independent Osborne has "an accessible story", says Steve Richards in The Independent. "He is on his road and he is planning to complete the journey after the two Eds took us to the edge of a cliff." The Labour leadership needs to add detail to its alternative journey. Labour's "astute focus" on the cost of living can only be part of a response to Osborne. How will it re-balance the economy so a recovery is possible that is based on more than debt and soaring house prices? "However contentious the ammunition, Osborne could fight the election campaign tomorrow. Labour still has some big decisions to make." ·