Why George doesn’t make the cut

Leadership for tough times – that’s what we offer”. This was the promise that George Osborne made to the House of Commons at the end of the highly anticipated Autumn Statement. With unemployment rising, markets falling and confidence stalling, one would hope that Osborne is a man of his word.

Yet in the same speech, Osborne delivered the bad news that overcoming the structural deficit will continue for two more years than originally forecast. Interpreting the disappointing forecast as a sign that the cuts imposed heretofore are failing, Ed Balls commented, “Plan A has colossally failed.” Meanwhile, George Osborne’s reaction to the gloomy figures can be likened to that of a gambler on a losing streak: blaming someone else, in this case the euro crisis (one critic satirized Osborne with the slogan, “It was the foreigners wot done it”) and upping the ante, with steeper cuts. Rightly or wrongly, plan A is still very much in full force.

As a result, Osborne’s economic policies will bring more hardship to our generation. For those of us lucky enough to have secured a job, you will now not be able to retire until the grand age of 67 (at least); for the aspiring civil servants and teachers among us, your public sector pay rises will be capped at 1% between 2013 and 2015. More disturbingly, new reforms will make it easier for employers to sack their workers. Considering we’re yet to see signs that the cuts will visibly reduce our national debt in the long term, you could be forgiven for feeling a little disillusioned. Even David Cameron appears to be feeling disheartened, admitting that sorting the economy out is “proving harder than anyone envisaged”.

Osborne offered a tonic to the cuts; notably tax credits and a delay in the rise of the price of fuel. Yet these incentives will not trickle down to the poorest. Pre-empting the criticism that was to come, there was a roar of laughter when Osborne declared: “We will not risk… the security of British families.” This was irony at its best, because moments later the respected Institute for Fiscal Studies found that George Osborne’s new plans will hit the poorest the hardest and will push more children into poverty. The same study reported that Osborne will reduce the incomes of those in the bottom 30% of earners and benefit those in the top 60%. The Conservative mantra of “We’re all in it together” stood like an elephant in the room. We’re all in it together, just disproportionately.

The contradictions didn’t end there. Let me take you back to the 2010 election, Osborne’s rhetoric laden speeches attacked Gordon Brown for creating “a mountain of debt”.

In a staggering moment of contradiction, Osborne announced that national debt will reach £1.36 trillion by 2015, equivalent to £23,000 for every Briton. In fact Osborne is set to borrow £112bn more over the next four years than his Budget originally estimated. On a closer look, the Government will borrow £79bn in 2014-15 – more than double the £37bn which he had previously forecast and more than the £74bn predicted by former Labour chancellor Alistair Darling. Too often Osborne has likened the deficit to something as simple and solvable as a gas bill. Osborne is waking up to the harsh truth that borrowing is unavoidable at the worst of times. Yet the cuts continue. Pot, kettle, black anyone?

Of course, some business leaders clung to what they deemed a clearly detailed and well thought-out plan made in reaction to a tough market. Whether his policies endure the debt storm and succeed in creating sustainable long term growth, remains to be seen.

What is a universal truth, however, is that Osborne needs vision, and confidence in his vision. Yet economists have focused on his decision to plough £5bn of public money into hundreds of infrastructure projects to help reignite the ailing economy, as a sign that perhaps the Chancellor is laying the foundation for a Plan B. The infrastructure plan will include £20bn of investment from UK pension funds, in a bid to breathe life into Internet and railway projects. Some have likened this to Japan’s desperate reaction to their own stagnation, when they ploughed money into infrastructure projects in a bid to restore an economy that remained depressed for a further ten years. Either way, this is clearly a change in tack, raising questions about Osborne’s confidence in his original economic policies.

The Autumn Statement brought depressing forecasts, dressed in a rhetoric that attempted to restore the public’s trust in the Chancellor to lead us out of difficult times. Until the polls come in, it is clear that doubts have been raised over Osborne’s grip on the economy. “Leadership for tough times – that’s what we offer”: the jury remains divided.