Osborne gave a confident performance yesterday. But so did Ed Balls. After last time that must have been a relief for Labour. It should rattle the Tories. Not because of the better Commons performance of the Shadow Chancellor, but because of of what lies behind it. Labour’s economic team, having stuck rigidly to a pretty lacklustre economic mantra for most of this parliament which predicted endless flat lining, seemed wrong footed faced with record economic growth delivered by Osborne.
The powerful Balls performance yesterday suggests they have now twigged what is happening. Tax receipts are falling because productivity is at record lows, thus the deficit grows bigger; there is now a peculiar third world low wage economy emerging for the many; the welcome stamp duty rationalisation has not been correctly tabulated and may lead to a further rise in house prices and rents which will require extra government spending on housing benefit from a lower tax base increasing the deficit; the new Google tax is so obscure as to be probably uncollectable; and in order to pay for everything, reduce the deficit and fund the infrastructure programme announced in the previous few days, the Tories will, if elected, initiate the biggest cuts in public expenditure yet seen after the general election which will shrink the size of government to the recession bedeviled 1930s.
In the urban marginals up and down the country the Labour high command knows nobody is going to vote for that. That is why Balls is so chipper.
Or, as the infallible Robert Peston reminded listeners on this morning’s Radio 4 Today programme, the accumulated debt mountain is so gigantic that the present consumer led recovery cannot be sustained for long.
Or as this Blog warned at the very beginning of the recovery programme, the only economic plan the Tories know how to run is one led by a housing boom.