GEORGE Osborne can be expected to lower his reedy tones into something more like a baritone as he stands at the House of Commons despatch box today.
As with his sombre conference speech in Birmingham in October, the Chancellor is said to be preparing to offer an unvarnished assessment of the continuing problems the UK economy is facing.
The memory of April’s Budget omnishambles, which crumbled faster than a week-old Greggs pastie, is still fresh in his mind. With the Treasury expected to wave sayonara to its deficit targets, the aim will be to show that at least there is candour and authority at number 11.
Grim realism is fine as far as it goes but the Chancellor knows full well that, three years into austerity, the demand for growth-producing measures is now overwhelming him. Yesterday’s announcement of an extra £5bn spending on capital projects was aimed squarely at answering those calls. He can be expected to lay out a few more plans today, especially on tax relief, regulation and supply-side reforms, in an effort to show the UK government is on the case.
But while Mr Osborne’s efforts will dominate the debate today, the bankers and economists behind him see a bigger picture that remains stubbornly resistant to medicine. Andy Haldane, the Bank of England’s financial stability director, laid it out in astonishingly blunt language earlier this week. “This is as bad as a world war – that is the scale that we are talking about,” he told the BBC’s World at One. “If we are fortunate, the cost will be paid by our children. More likely it will be paid for by our grandchildren,” he added.
Other analysts, such as former Bank of England monetary policy committee member Andrew Sentence, say the country has to get used to a “new normal” of persistent low growth. Now economic adviser to PwC, he noted: “There is a degree of inevitability about this period of restraint going on perhaps longer than 2015 and 2016. There is a big readjustment that needs to take place,” he added. Last week, the Bank of England for the first time compared Britain’s situation to Japan’s “lost decade”, raising the prospect of a zombie economy, weighed down by the bad debts still carried by banks.
Mr Osborne’s power to do much about it are limited. In the short-term, notes the Bank, the jitters in both the eurozone and the US will have to be settled, providing a platform from which to build. And, last week, Mr Haldane proposed that we needed – finally – to give Britain’s banks a proper “spring clean” in which they own up to whatever awful stuff is still on their books. Without such truth and reconciliation, he declared “the fog will persist” – and the banks will continue to refuse to lend.
Mr Osborne’s efforts today will tweak the tiller of the boat as it tries to negotiate the storm. But for a change in the weather, it looks like that will have to come from elsewhere.