In Birmingham this week all the talk is of two dates. There’s 2015 of course, but also 5 December this year, because that is when George Osborne will have to spell out (in the autumn statement) how the coalition is planning to respond to our continuing lack of growth.
Since Osborne delivered the Budget in March, Britain has slipped back into recession and the Conservatives have undergone their most difficult period in government, and this has only added to the importance of the autumn statement.
Both sides are acutely aware that within weeks, the Office for Budget Responsibility will present the coalition with its economic forecasts. These will reveal how far off the coalition is from having national debt falling as a percentage of GDP by 2015-16, its key fiscal target. At which point, the government will have to decide whether to cut more to meet it or simply abandon it.
Nick Clegg has tried to pre-empt this debate by telling his party faithful that the Liberal Democrats would enact ‘not a penny more, not a penny less’ of the cuts that the coalition has already agreed. In other words: no new cuts. George Osborne, by contrast, has told Cabinet colleagues that he believes that the government will not be that far away from its target and would be mad not to try and meet it even if that meant more cuts.
Conservative Cabinet Ministers are quick to say, privately, that they agree with this analysis. They worry that jettisoning one of their main economic policies would reinforce the impression that the government doesn’t have, to use a very Tory word, grip.
In his conference speech, Osborne stressed how Ted Heath had flinched when the economic going got tough and lost. By contrast, Margaret Thatcher had doubled down and won.
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