by Rob Marchant
Delight, for many on the left, met the economic figures last Wednesday. Britain was not in recovery after all, but was the victim of a double-dip recession. Paul Krugman wrote eloquently of Britain’s “death spiral of self-defeating austerity”, and Ed Balls had a very good day.
All true, or very likely so, although one cannot know for sure, Balls and Darling seem to have been closer to the mark, and Krugman is usually a pretty shrewd observer.
Balls’ argument is looking considerably stronger than it did and, in parliamentary terms, as Dan Hodges puts it, he “put George Osborne on the canvass” . So this is the start of Labour’s long road back, right, now we have fixed our economic credibility problem?
Ah, would that it were that simple. Where we might want to differ from the good Hodges is when he says that “Balls has won”. He has not. Labour has not. For a number of reasons: but most already known. Stephen Beer, a fund manager, warns at Progress that we have not done “enough to restore economic credibility for Labour”, and he’s right.
But it is more than that. Even if we can make a convincing argument, in the court of public opinion, for being cleared of economic incompetence, there are a half-dozen other charges which it will surely want taken into consideration.
First, as Hamish McRae points out in the Independent , government predictions have underestimated GDP by half a per cent, on average, over the last ten years. So we may well not actually be in recession at all after the figures are corrected.
Indeed, the insightful McRae goes as far as to predict that the “doomsayers will be proved wrong” on the basis of some alternative figures from Goldman Sachs. Not conclusive, but enough to make us hesitate.
Second, the Tories being proved wrong is not the same as Labour being proved right. We do not know for sure what might have happened, had Darling or Balls been Chancellor instead of Osborne. Neither can we even explain in detail what we would have done: while we have specified a level of cuts, we have not yet said where we would have cut, which of course could affect outcomes.
So Labour might have done just as badly, or worse. We do not know and, besides, the game of alternative histories is rarely one which moves voters.
Also Beer writes correctly that, on top of this, we need to get back credibility with the financial markets, where we currently seem to be doing our best, via our “predators versus producers” talk, to alienate them.
