1981 and all that

LP Hartley could not have been more wrong. The past is not a foreign country to which we can never return. It fills the minds of the living and stops us seeing the present clearly.

My Observer colleague Andrew Rawnsley tells our nervous readers this morning that David Cameron and George Osborne have no Plan B for the economy. They believe they are right and will not change course, in part because the myths of the past possess them, specifically the myth of 1981.

“The final reason why they do not have a Plan B flows from the way they interpret history. The prime minister and the chancellor are keen students of the Thatcher governments, especially her first term. The pivotal moment was the budget of 1981 introduced by Geoffrey Howe, then the chancellor, with Nigel Lawson, then the financial secretary, as his principal lieutenant. They imposed further deflationary measures on an economy already in recession.