Economy: Stick to... no, change... the course

David Cameron and Vince Cable (file pic)

The prime minister and his business secretary today risk sounding like an irritable couple arguing over what route to follow.

"Stick to the course," David Cameron will say in his speech in Keighley.

Perhaps we should just turn left a little, Vince Cable muses.

I told you so, we should turn left now, shouts Ed Balls from the back seat.

What sounds like a new split is, in reality, the public rehearsal of a private argument which the business secretary has been having with the Treasury for some time with Labour cheering him on. Vince Cable believes that when interest rates are so low and growth so invisible it is worth taking the risk of borrowing a little more to spend on building houses and other infrastructure.

The Treasury's answer to him has been: Yes, we'll increase capital (investment) spending but only by making further cuts to current (day-to-day) spending but we won't borrow more. Today Nick Clegg appeared to back that view.

Vince Cable has not overnight turned into Ed Balls. He is not, for example, arguing for a short-term cut to VAT to boost demand. Nor has he turned into the Tory right who are also crying out for tax cuts now which they claim will pay for themselves.

Cable's long, dense and academic article for the New Statesman magazine is described by one of his colleagues as "intellectual masturbation". It is an economist's attempt to answer the critique - made in particular by the Keynesian Professor Robert Skidelsky - that he has connived in Tory policies that have destroyed any prospect of growth. That's why the article was read and approved by the chancellor's principal economic adviser. It is also a piece of political positioning ahead of the Lib Dems' Spring Conference tomorrow.

In other words the view in government is that Vince is just being Vince. Outside the Westminster village though many will ask - is it time the government changed course... even just a little?

PS: David Cameron will claim today that "there are signs that our plan is beginning to work". He will say that exports to developing countries are up, there are a million extra private sector jobs, employment levels are rising in every part of the country (and fastest in the north of England), there's a faster rate of new business creation than at any time in our history and there's been the biggest increase in private enterprises on record - more than a quarter of a million new private sector businesses.

Green shoots anyone?

Nick Robinson Article written by Nick Robinson Nick Robinson Political editor

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  • rate this

    Comment number 15.

    "intellectual masturbation" ?

    I would take that over "growth impotence" any day

    Economics is a fluid science so to inflict a rigid economic policy when circumstances dictate a need for flexibility only makes sense to the blind.

    "Ideological masturbation" has already proved this point

  • rate this

    Comment number 14.

    "The pound jumps on the foreign exchanges after the Bank of England decided not to increase its quantitative easing (QE) programme"


    From 1.15 to 1.158 euros for an hour. It's since declined to 1.145.

    I'd pull that story.

  • rate this

    Comment number 13.

    "Green shoots anyone?" - khaki sharts, more like. It's a good job well done by the backroom handlers of The Unappealing Posh-would-be-dude Cam and his chum Gideon 'terribly nice but dim' - manouvering the hapless Cable into the firing line of the 'more spending' Catch 22. Well played Tories, well played. *sigh* - I had such high hopes for Cable.

  • rate this

    Comment number 12.

    All well and good, Dave, sticking to the course for cuts.

    The only trouble is that your Ministers and you have all been spending new money. William Hague was the latest, just last weekend, announcing new help for Syrian refugees, 'rebels' or whatever. You were at it too, if I recall correctly, making spending announcements at the Tory Party conference.

    You sounded very hollow today.

  • rate this

    Comment number 11.

    WAVE Trust (formed by an internationally successful economist) has developed a brilliant strategic proposition to improve the economic performance of the UK.

    Validated by top civil servants in Dept for Educ and Dept of Health, and by Nobel prizewinning economist James Heckman, WAVE's work shaped the BIG Lottery project "A Better Start".
    Contact for invitation to Guildhall to hear more.


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