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 324.

    The cat has the cream.

    He's licking his lips.

    What else do we expect from this shower?

    Loads of money spent on the Olympics.
    No wonder this shower is full of feel good factor.

    No riot this year either.

    One could be excused for believing they know what they are doing.

    But they don't.

    All they are doing is making their friends happy.

  • rate this

    Comment number 323.

    Dear Ms Flanders,

    It is rather disconcerting that nobody appears to be concerned that the policies being pursued in eurozone are remarkably similar to those pursued in the 1930's which lead to the rise of extreme nationalism in a number of european states. We already have Golden Dawn and similar groups in Italy and Spain as well as Holland and France.

  • rate this

    Comment number 322.

    re. Growth

    Real growth is information gain, i.e. reduction in entropy. Technology is one form of this. In the late 20th century genetics changed from a descriptive science to a quantitative one, discovering long term growth over a period of 4 billion years. Growth happens by genetics, neurology, language, technology, etc. In an economy, information is created by micro-economic search.

  • rate this

    Comment number 321.

    Emphasis on growth or deficit is more of the same old failed paradigm. What's needed is employment growth even if without economic growth. More people working will reduce the income disparity of the past decade. This coalition is heading in the right direction. And it is people employed as % of population of working age please; not unreliable unemployment %.

  • rate this

    Comment number 320.

    Allowing the banks to put money into risky assets caused the crash. The risky assets were people who were encouraged to use credit cards to buy things they couldn't really afford. The banks issued the credit cards, the banks caused the whole crash.

    It had nothing to do with "the country" spending more than they could afford.

    The banks need to pay. Threats about "leaving the country" be damned!

  • rate this

    Comment number 319.

    The Chancellor's speech was excellent and did mention growth and Plan
    You "grow" our economy in the face of our competitors by making the UK a good place to do business; stop importing great quest workers to do the work we could do if we weren't lured into the benefits trap, reward those that work and save, etc.

    Plan B was rejected as it was the path followed for 13 years.

  • rate this

    Comment number 318.

    Post #317 referred to #303 econoce, not 299, as first stated.

    #299 is just plain insulting.

  • rate this

    Comment number 317.

    #299 econoce - see #258 for NIESR Q3 GDP growth reference & trade figures for balance.

    Private sector employment increase came from Olympics (over), self-employment, zero-hours contracts; all removed people from the unemployment register, but may not increase growth. People might spend all week bidding or selling, but make no sales, or may be offered 0 hours work. Games makers were volunteers.

  • Comment number 316.

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

  • rate this

    Comment number 315.

    Tax, spend, borrow, print 'Growth policies' & property bubble as pursued by previous Labour govt have crashed our economy & left UK with higher debt levels than Greece.
    Pursuing growth policies now will bankcrupt the UK & send us to IMF with Labour begging bowl due to INFLATION on food, energy & fuel prices & immigration particularly.
    Political /media 'growth babble' doesn't help us here?

  • rate this

    Comment number 314.

    lets put it in the same analogy as say 'your heating system breaks down' so you try to fix it, you try turning it off/on it still doesnt you try turning it off/on it still doesnt you try turning it off/on it still doesnt you try turning it off/on it still doesnt work...PLAN B now!! we will try the same thing...unbelievable!!

  • rate this

    Comment number 313.

    311.Eddy from Waring

    310: I can see that tech progress can cause growth.
    If you mean 'sales & revenue' - why not say 'sales and revenue'?

    Big problems when ALL GDP combined eg QE, borrowings, govt interest payments with eg tech sales & revenues & becomes a meaningless hotch-potch - different products, services, monetary systems, domestic, international, sale of alchohol with NHS costs etc

  • rate this

    Comment number 312.

    Austerity is not solving the problem - this country has failed to make a profit since 1980: i.e. every single penny of GDP created since has been the result of debt and asset price inflation. It has not made a single penny piece of wealth as an economy, some has been imported but none created. Austerity works when we stop importing and start exporting - all else is simple blowing bubbles.

  • rate this

    Comment number 311.

    310: I can see that tech progress can cause growth. New things (that I never foresaw in my dreams) like handheld video phones, that people want and for which they are willing to pay create value. But I think that revolution is now ending.

    Further progress might come in medicine though, so I expect that's why people are being softened up to pay...

  • rate this

    Comment number 310.

    304.Eddy from Waring
    "...'Growth' is just plain babble - as is a 'nebulous concept' like eg 'sufficient plularity', 'One nationism' or even the 'big society'
    'Growth' is also an 'altruism' - more money ... more money there is - as value of 'everything' cannot be the total value of a concoction of different valuation methodologies for different goods, services & systems of money?

  • rate this

    Comment number 309.

    303 Too much to expect that you would understand that the official figures are released by the ONS and not anyone else. These are the figures which government and others use as the definitive ones, NIESR may well be right , most forecasters expect it to be the case - and Steph has already mentioned as much in previous blogs along with the employment numbers.Your record is broken and boring.

  • rate this

    Comment number 308.

    303, "menaingful increase in private sector employment" has occurred because people who really need full time work are having to settle for part time. Most of the "jobs" created are either half jobs, or are the result of people setting up their own business. Looks good now, but as historically 95% of businesses fail in their first year things will not be so rosy a few months down the line.

  • rate this

    Comment number 307.

    'With almost half a million job vacancies'
    and these are f/t reasonably paid jobs? unfortunately they won't make much of a dent on 2.68 million unemployed and over 1 million young people not able to claim JSA but still unemployed....or are they the usual 'meets NMW' providing you manage to con some poor unsuspecting fool into signing something job?

  • rate this

    Comment number 306.

    The panto season has started early this year. The never ending parade of liars who graced the stage at the Tory rally appear to be living on another planet. Even all the evidence this week of the collapsing economy has fallen on deaf Tory ears. Economic indicators are showing red, government response? Nothing, carry on as usual and continue with the policies that led to this disaster.

  • rate this

    Comment number 305.

    Osborne has 'A*+' opportunity to bring a nationwide personal income stimulus to ENTIRE UK in March budget, if not sooner, by using QE to gradually phase out/reduce eurocrat VAT. Govt can use wholesale coupons for C&E accounting for QE money & finance VAT reduction (by not allowing QE monies into wider money supply) as result will be good multiplier effect. Is better use of QE than current fiddle?


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