Duncan’s Economic Blog

Osborne’s Guardian Article: A Lesson for Labour and a Question.

Posted in Uncategorized by duncanseconomicblog on March 1, 2011

Osborne has launched a savage attack on Labour’s economic policy in the Guardian.

Sunny at LibCon and George Eaton at the New Statesmen have both responded.

It’s a powerful attack on three main grounds: the structural deficit pre-crash, Labour’s supposed ambiguity on cuts at the moment and the ideological nature of the cuts versus the organisations supporting Osborne.

Most of it is unremittingly negative.

In 772 words, the word ‘growth’ appears only once. It’s almost entirely backward looking and focused on 1997-2010 rather than the years ahead.

Responding to Miliband’s superb Resolution Foundation speech, Osborne can only admit that ‘we can all agree is that these are difficult times for family incomes’ before blaming global factors and ‘UK imbalances’.

I think there is a lesson here for  Labour and also a question.

The lesson is this: Osborne knows that living standards are set to squeezed over the next few years and is desperate to keep the debate on the deficit. He simply doesn’t have an adequate response. He can blame ‘global factors’ and ‘imbalances’ all he wants, but he has increased VAT and his policies will increase unemployment and hence decrease wages.

The question for Labour is more demonstrated by the responses than by Osborne’s piece. We all agree economic policy requires credibility – but does credibility come from defending our economic record as if there wasn’t a problem or from setting out what went wrong (including, as I’ve argued, the structural deficit) and why we wouldn’t do it again?

I’m not sure what the answer to the question is, but Labour needs to learn this lesson and keep the debate on living standards, jobs and wages.