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 104.

    Its tea party politics, appeasing older generation who do vote and punishing the younger generation that don't.

    The problem is that its the younger generation (under 30's), who are the people that spend and thus drive the economy. So when you are taking away benefits that help young people, its hardly surprising that the economy is so stifled.

  • rate this

    Comment number 103.

    @ Shan735

    We did - it used to be the Labour Party

  • rate this

    Comment number 102.

    Osborne If we are all in It together

    How about starting with Fred goodwins pension pile.

    If you are expecting workers to give up rights such as redundancy pay when firms goes into bankruptcy you have got to be kidding

    This will only encourage more high leveraging mega corporate buy outs. Banks yet again get golden handshake knowing that more of business to divulge up in such scenario

  • rate this

    Comment number 101.

    Osborne says the public are in favour of cutting the welfare budget, benefit cuts are to help people out of the poverty trap, it should always pay to work, the benefits system is unfair.
    So why cut tax credits for working families, why continue in the false belief that the minimum wage is a living one, why allow utility companies to rip off families, why allow huge tax avoidance?
    Wake up public.

  • rate this

    Comment number 100.

    Public Sector Finances, July 2012
    Latest figures
    Public sector current budget surplus was £1.2 billion in July 2012; this is a £3.0 billion lower surplus than in July 2011, when there was a surplus of £4.2 billion.

    How's it going Osborne? You seem to be very, very selective in the figures you quote.

  • rate this

    Comment number 99.

    Gideon stands up and talks.

    The onlookers applaud. Applaud note well.

    Sucking us all dry. All so the moneyed can keep their money and do no work.

    Who says these are not the nasty party?
    They are positively revelling in it.
    Taking it in turns to see how nasty they can be.

    Does he know what he is doing?
    Doesn't matter. His mantra is cut, cut and cut some more.

    A one trick pony.


  • rate this

    Comment number 98.

    We could easily have growth If wealth were equally destribute

    As it is the wealth stashing cash while us plebs starve

    Until he make a massive uturn and helps poorer families by a number methods poor get poorer and rich get richer

    It can be right we bailout bankers and yet they run away with the loot

  • rate this

    Comment number 97.

    We are suffering the aftermath of Gordon's spend spend spend philosophy. And yet some think the answer is to just borrow a bit more and everything will be ok

    Never a truer word spoken. Now when we apply the same logic to the financial sector, curently £930 billion+++ and rocketing 'borrowed' you get the true picture. The result will be the same as in 2007, pouring petrol onto fires.

  • rate this

    Comment number 96.

    You know what?

    I think we need to form our own party and sort things out.

  • rate this

    Comment number 95.

    So nothing on growth, except more cuts which will have the opposite effect.
    Nothing on deficit reduction, see above, his policies are proving it
    Nothing on tax avoidance that is the biggest area of abuse in this country.
    A half baked proposal on shares and employment rights, and another attack on the poorest families in the country
    The mans not just out of touch, in my opinion he's a fool

  • rate this

    Comment number 94.

    We are suffering the aftermath of Gordon's spend spend spend philosophy. And yet some think the answer is to just borrow a bit more and everything will be ok. Well, no it won't and we have a hard battle to bring the deficit down before things will improve. The country now pays more to service debt than it spends on the NHS - how did we het here?

  • rate this

    Comment number 93.

    Public Sector Finances, July 2012
    Latest figures
    Public sector net borrowing was £0.6 billion in July 2012; this is £3.4 billion higher net borrowing
    than in July 2011, when net borrowing was -£2.8 billion (a repayment)

    How's it going then Cameron/Osborne and your fellow cronies? The figures don't lie, only you do. Much, much worse to come.

  • rate this

    Comment number 92.

    There are many people saying that we must reduce public spending if we are to produce growth. Wrong. The premiss of this argument is based on a fraud, moreover, an oxymoron. It is a non sequitur. The Brookings Institute says only one Western Nation will buck the global trend and produce growth this year - the USA. Why is that?

    The ConDems will only just whip us until our morale improves! Idiots!

  • rate this

    Comment number 91.

    Despite the evidence of fraud and corruption in the lame duck banking sector Osborne is still intent on not repairing the broken part of the economy, the banking sector. Going after OAP's, students, schoolcholdren, single parents etc is like shooting fish in a barrel. Going after the people who are still damaging the economy is not so easy, especially if you don't even try. Financial chaos iminent

  • Comment number 90.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 89.

    Our George is between a rock and a hard place..

    Prolly be a few headaches trying to work out the path of least resistance, or not as the case maybe...

    He`ll get it in the neck either way...

  • rate this

    Comment number 88.

    We have an economy that has for too long relied on defecit funded spending to create growth. Now we need good old fashioned growth that comes from economic activity , exports and increases in productivity .

    Problem is getting from state A to state B will need massive shrinking of the state . We are doing it slowly to ease the pain , but we are still a way off getting back to a balanced economy .

  • rate this

    Comment number 87.

    Let's face it the much lauded OBR hasn't been on the pace of what has been happening so we are basically just treading water on fiscal policy, hoping for it all to come right at sometime.

  • rate this

    Comment number 86.

    Any idiot except Osborne knows that if you have high unemployment your tax take goes down and your benefits bill goes up and if you have low unemployment your tax take goes up and your benefits bill goes down.

    Instead of making sure that those who avoid tax pay their fair share he goes for the easy target time after time (after all they are not going to fund his party are they).

  • rate this

    Comment number 85.

    What tune was George Osborne singing today? Easy. Got to be -
    'Give me just a little more time'. (And our love will surely grow.)
    Wonder if we'll get an encore around this time next year?


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