Few things have been as stable in British politics as the relationship between the Prime Minister, David Cameron, and his Chancellor, George Osborne. The two are old friends, cut from the same cloth, and enjoyed each others’ company even before Cameron rose to lead the Conservative Party. The trust and shared purpose between the two men is tangible, according to those closer to them than I. But the time has finally come for David to sever the ties that bind.
The sad fact of the matter is that George Osborne has failed, and failed badly. Ignoring Royal Mail pension effects and his audacious grab on the Bank of England’s QE proceeds – something that completely undermines his commitment to an independent central bank – the UK will have a higher deficit at the end of this financial year than last year. Growth is non-existent; having been very much in recovery mode when the coalition came to power, the economy has basically flat-lined ever since. For all the troubles in the euro area and swings in global commodity prices, fiscal austerity has definitely contributed to squeezing the life out of the economy, as even the Office for Budget Responsibility said last week. The Chancellor even failed his own test when Moody’s stripped the UK of its prized ‘triple-A’ credit rating earlier this year.
Any sensible policymaker would try something different now. Old-school Keynesians and even some coalition members are now openly musing about the benefits of more capital spending. On the right, free-marketers would like to see even deeper cuts to public spending to fund cuts in tax rates and spur private sector growth. I, like everyone else, have my own views about which one of these would be more effective. But, faced with the incontrovertible evidence that his plan is not working, Osborne seems unable even to pick a side. The end result is that we are left with an impotent figurehead of a Chancellor, rather than someone who is actually prepared to try something (anything!) new to get the country working.
Ordinarily, I would be tempted to give an incumbent Chancellor the benefit of the doubt with a Budget looming in a matter of days. But all the signs are that Osborne has no new ideas – and is too scared to try anyone else’s. For the good of the country, Cameron now needs to bite the bullet and give someone else a crack of the whip. I know that politicians rarely care about the economy, other than as a means getting re-elected. But putting an old friendship before the welfare and future of the country will hold no water with voters come the 2015 election. Cameron should now finally replace Osborne, if only to demonstrate that he still has the conviction to actually try to sort things out, rather than just giving up like his Chancellor. If he does not, I fear the Prime Minister will be exposed once and for all as the archetypal PR man, lacking in any principles and substance.