Osborne’s big step

As George Osborne was addressing Tory conference, Standard and Poor reaffirmed Britain’s triple A rating. For the Osborne team, it sent out the perfect message — their deficit strategy is keeping the nation creditworthy. It was their piece of conference theatre for this year.

The Chancellor’s address was a sombre affair. But, in some ways, it was his most impressive conference performance. It was a classic Osborne blend of politics and economics, but distinguished by a clear and precise analysis of why the economy was not recovering.

Osborne’s big policy announcement was that the Treasury was now exploring credit easing. I’ll have more on this soon, but essentially the idea is for government to create a bond-lending market for small and medium business. As these bonds will be treated as contingent liabilities, they won’t hit the government’s deficit reduction strategy. The economic aim is to get lending going. The political one is to show that the government is not being passive in the face of harsh economic conditions.