Monday, 25 February 2013

Can a Chancellor admit defeat?


Britain's loss of its triple-A credit rating is no surprise. This has been coming for many months - perhaps for many years. And it would have been difficult to avoid, whoever was in power. Only Canada and Germany, riding high on cheap oil and gas in the first case, and cheap and well-built Eurozone exports in the latter, still have tip-top credit ratings. The United States, held up so many times here as possessing a rather more sensible economic stance, lost its top credit rating way back in 2011.

No. It's not that we've lost that rating - decided on by completely-discredited agencies that used to tell everyone how reliable the American banking system was.

It's these standing facts: as this column has argued for years, the UK's budgetary stance is all wrong. It front-loads too many cuts to answer the questions it's flunked anyway; it has always depended on completely unrealistic assumptions about what can be achieved; it's fetishised debt rather than growth. It's been a mess from start to finish. And the final proof of the pudding is in the eating. It hasn't worked. The Conservatives may well win the forthcoming Eastleigh by-election. They will probably avoid the opprobrium invovled in a triple-dip recession. It is more than just possible that they will be the biggest party after the next General Election, especially if some sluggish growth gets going during 2014.

Never forget: the Chancellor (above) bet it all on black. And it came up red. Very red. He lost his great big gamble, pushing his political credit to the brink and - what is still worse - helping to make Britain's whole strategy look pretty threadbare. Our debts are rising, not falling; they are way off target on any measure; the Chancellor has already pushed back his targets once, and probably will have to do so again. Many times. The fact that 'Public Policy and the Past' predicted every detail gives the present writer little comfort, given all the damage that's been done.

Now the Chancellor should move on - to another job in government, perhaps, but away from No. 11 Downing Street. That's what happened to 'Rab' Butler after his ridiculous two Budgets in 1955; and to James Callaghan after devaluation in 1967. Both swaps did the UK's credibility no end of good, Harold Macmillan and Roy Jenkins presiding over rather more sober and successful regimes inside the Treasury. Callaghan even ended up becoming Prime Minister after that awful humiliation, so a change of job should not even end Mr Osborne's ambitions. It would do the United Kingdom good to have such a new start.

But will it happen? No, probably not - yet another example of not learning from our past.

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