George Osborne chooses his words carefully

George Osborne George Osborne gave only the broadest sense of the tough decisions he will take over coming months

There was some politics in George Osborne's speech on Monday - as you would expect, at a party conference. But no policy fireworks. And he gave only the broadest sense of the tough decisions he would be taking in the months ahead. That's probably not surprising either.

The difficult reality for Mr Osborne is that the coalition has been struggling to deliver on the two goals that were right at the centre of its economic strategy: growth and deficit reduction. Put simply: the lack of one has made the second a lot more difficult.

As I have previously described in detail, these problems are going to come to a head in the next few weeks, because the Office for Budget Responsibility (OBR) is likely to have some bad news for him.

If the independent forecasters are right, the OBR is almost certain to tell him that he will not be able to meet his debt target - that is, to have the stock of debt falling as a share of GDP in 2015 - without additional tax rises or spending cuts, before the election.

If the FT's economics editor, Chris Giles, is right, the OBR is also likely to tell him (again) that the structural hole in the public finances is larger than previously thought, meaning even more austerity is required, well into the next parliament.

Last year, Mr Osborne decided to put off additional measures to fix the deficit until after the Budget. The betting in Westminster is that he will do the same again in December's Autumn Statement. But this time, that is likely to have the extra consequence of forcing him to abandon, or suspend, his debt rule for 2015.

Were there any clues to that in Monday's speech? The simple answer is no. In fact, he did not mention either of his two key fiscal targets in his speech.

To be fair, he didn't mention them in last year's party conference speech either. It's not that kind of moment.

No 'growth'

But what about the coalition's core objectives: economic growth and the "deficit reduction plan"? They have each played a prominent part in previous speeches by Chancellor Osborne.

You might be surprised to hear that he didn't directly mention either of these terms on Monday. As many of the Twitterati have noted, he didn't use the word "growth" at all.

Some will say he didn't mention them because he cannot be sure of achieving either growth or deficit reduction in 2012. The economy will probably be smaller at the end of the year than it was at the start, while the government's deficit so far in 2012-13 has been running about 20% higher.

Or, perhaps, we're all reading too much into his choice of words. Either way, the next few weeks are unlikely to be a fun time to be chancellor.

Stephanie Flanders Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this

    Comment number 44.

    Bluereed are you kidding me! The labour party political Einsteins!? Labour managed to defy e=mc2 by destroying the very energy at the core of this great country. They left us all in a hapless mess and they must never be given another chance while the Eds and other culprits remain at the party helm.

  • rate this

    Comment number 43.

    The only way the last Conservative government began to get out of the mess Thatcher and Major created was to drastically devalue the £. Camborne have no policy for growth any more than Major and Lamont did before the markets stopped supporting Tory economic policies, and are much more practised in U-turns. The Conservatives have always replaced TINA by inflationary policies sooner or later.

  • rate this

    Comment number 42.

    The two points causing problems, growth and deficit reduction. If we hadn't got the deficit created by Labour overspending and stupidity he wouldn't be trying to sort their mess out and we might have actually had the chance to grow a bit. he's just trying to clear up the mess labour (who are suspicuously silent on the subject) made in the first place though theya re very vocal now in criticising.

  • rate this

    Comment number 41.

    This graph shows REAL GDP for the UK over the last decade or so.

    REAL GDP was effectively flat over New Labour years & 2010 spike was Labour's elephant trap of crazy spend it all & QE spending - in terms of REAL GDP - Coalition govt has UK on trend to exceed the flat Labour REAL GDP performance.

    Is this an economics blog or BBC/Labour spin?

  • rate this

    Comment number 40.

    The reason Osborne didn't mention growth or the deficit is because he has been a spectacular failure at both. Osborne, Cameron and Clegg have lied through their back teeth but people are now getting wise to their mendacity. This Coalition make New Labour seem like political Einsteins. Welfare reduction is just playing to the Tory faithful. Wouldn't it be better to tax the rich?

  • rate this

    Comment number 39.

    Interesting that Ed Milliband did not even mention the structural deficit in his Conference speech; i.e. a deficit that will not disappear even in times of economic growth. This is typical of opposition parties who promise they can cure every problem (usually without pain for their supporters). This is economic nimbysism of the worst kind.

  • rate this

    Comment number 38.

    #37 I have a friend in edinburgh where above her eis a flat with 50+ chinieese hot bedding in a slum landlords flats, he is from pakistan. He never fixes anything. How r UK national gong to compete with that then ?

  • rate this

    Comment number 37.

    Why are we cutting benefits and not raising the minimum wage?
    Why do they speak of regional rates for benefits but have fixed minimum wage?
    Surely giving more people money in their pockets might help, but having multi million pound companies pay the lowest of wages is not helping anyone.

  • rate this

    Comment number 36.

    Mine @29 continued...

    If we all - for selfish reasons - continue in our refusal to accept responsibility for any economic recovery, this country will continue its long and steady decline.

    The rest of the world could care less about the UK.

    If one accepts that all politicians are produced from the same mould (as I do), then the solution clearly lies in our own hands.

    Bluntly... stop moaning.

  • rate this

    Comment number 35.

    yes a fair degree of Tax of coause unless you work for the BBC.

    Huge amount of staff earning huge monies but paying very little in tax/NI.

    BBC toffs earn multiples of David Cameron - some of them must have gone to posh private schools to be so viciously arrogant

  • rate this

    Comment number 34.

    yes a fair degree of Tax of coause unless you work for the BBC.

    Huge amount of staff earning huge monies but paying very little in tax/NI.

    and also donating to the labour party such as Alan Davies for example

    wonder how long this take stro get removed by the BBC

    no aring of dirty luandry in public.

    I have to pay a TV licence so its a tax if I watch TV

  • rate this

    Comment number 33.

    Mr Osborne must use a unique Oxford Dictionary, one which does not include the words dynamic, and kinetic.

  • rate this

    Comment number 32.

    The amount this country will give govt in tax has stayed pretty constant for 50 years. The amount govt spends (and what voters want spent) has gone up. Fortunately I will be retiring within 5 years and intend leaving the country because no one is willing to admit that the maths does not work

  • rate this

    Comment number 31.

    The key thing is that Mr Osborne's policies are working ... for people of his background. Wealth has flowed to and been hoarded by the wealthy, who are not investing it or spending significantly. As real incomes fall, as unemployment and those opting out of employment rises, as part-time working increases, as employment protection reduces, the majority is disempowered and politically impotent.

  • rate this

    Comment number 30.

    Why are we paying housing benefit to office cleaners in London. If banker's don't want to clean their own toilets they should pay a better (market) wage? Child benefit should be paid for first child only?

  • rate this

    Comment number 29.

    If this country is to climb out of the economic hole it is in, a fairer society needs to be created. That means the wealthy must contribute more and the benefit abusers must be rooted out.

    There has to be a big reduction in the proportion of GDP spent by the state - now at 43% - and an attitude that considers government waste to be an economic crime.

    A collective change currently denied by all.

  • rate this

    Comment number 28.

    Has he delivered on the deficit? No.
    Has he delivered on growth? No
    Are we all in this together? No, since he is in the party of the Home owners and 25% of his MPs are BTL.

    If he cared about the deficit he would either introduce the mansion tax or he would at least tax the BTL's and the empty properties.

    He has not performed well and should resign. Simple as that.

  • rate this

    Comment number 27.

    Their whole approach has been wrong, They have set this country on a path to many years of stagflation and ruin. There we trying too hard to score silly political points against labour.


  • rate this

    Comment number 26.

    He keeps talking about cutting the deficit by reducing the obscene levels of benefits, but so far nothing has happened. Local government is still growing, and national government is still employing far too many people for the private sector to support. Instead of talking about cuts, why do they not go ahead and do it.

  • rate this

    Comment number 25.

    The banks are stuffed with tax payers money and are nolonger hungry for savers. At last accounts RBS alone had £90bn cash sat useless in the BOE. Keeping base rates at sub-normal levels is not helping demand because savers are trying to preserve their wealth Normalise the rates and create an incentive to spend and invest? Taking money from savers to subsidise the 'will not work' is no way forward


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