The deficit must not become the elephant in the room of Labour’s leadership election.  Labour needs economic credibility to form the next government.  Good candidates should – among other things, obviously – demonstrate that they would provide the leadership necessary for this credibility.

The deficit will define much of the politics of this parliament.  The temptation will be great for Labour to duck its tougher questions.  This won’t just be because ducking is always a tempting response to tough questions, especially questions as tough as those raised by public spending cuts.  Temptation will also derive from a Labour reading of the future that is so optimistic that it risks complacency.  On this interpretation, the deficit will require the coalition to do deeply unpopular things and a horrified electorate will therefore rush to the comforting embrace of Labour government on the next occasion that they are offered the chance.

This analysis seems to come recommended by Mervyn King.  The Governor of the Bank of England is said to believe that the present parties of government will be forced into such extreme austerity measures as will keep them out of power for a generation.  But this thinking has a worryingly “one more heave” characteristic to it.  It tends towards a view that simply says: “We told you the Tories and Liberal Democrats were horrible and they are now being horrible. Come home to Labour.” (more…)