On Thursday, George Osborne, Chancellor of the Exchequer, will take to the floor of Britain’s House of Commons to reveal his Autumn Statement: a half-yearly budget review. He is expected to announce that Britain has gone from one of the slowest to one of the fastest growing economies in the G7, and that GDP growth will be revised upwards for the largest amount since the millennium, and likely in 20 years.
With Britain’s recovery thought to be in full-swing, one would believe the Coalition Government led by the Conservatives would have much reason to politically cheer, after years of dower austerity politics. David Cameron and his Party find themselves in a paradox of faster growth leading to greater political risk. Whilst no longer is the accusation from their opposition in the Labour Party valid regarding austerity and killing growth, at the same time with every greener and greener shoot of recovery emerging, their entire governmental purpose of moderate deficit reduction becomes less and less relevant. No longer will Britons favor more and more austerity, and with faster growth comes raised expectations for public investment and expenditure, alongside a potential greater acceptance for the kind of fiscal liberalism the Labour Party has become known for.
As Chris Giles of the Financial Times reports, the healthier and better public finances and economy will not give Chancellor Osborne much room to ease austerity, or be particularly sunny. For to give the impression of a job nearly done would be political suicide for a government that has spent five-years attacking fiscal irresponsibility, and would work to extend more fiscal leeway to their opposition who are already crafting plans coalescing around more government intervention to ease the cost-of-living crisis and lack of income growth in the middle class. Crucially of course, no matter the politics, the facts do not align: the deficit is falling, but has only been cut be one quarter, and further cuts to the structural deficit beyond those already announced will be needed up until 2017 in order to meet the ambitious reduction targets.
So on Thursday George Osborne likely will, and ought to, do what they have been doing best—trying to offer cast-iron proof that recovery is under way, all whilst maintaining the need for stern management of the public purse as a means to help secure that recovery. That, more than any individual budget change, will allow the UK Conservatives to escape the paradoxical nature of being an austerity party succeeding in bringing about economic recovery.
Photo credit: Wikimedia Commons