The sad truth is that until Tory MPs – and members – get serious about the trade-offs required for the long-term sustainability of the public finances, tax cuts will remain a pipe dream, and Britain’s economic position will continue to deteriorate.
Whilst spending more nearer to an election is often an election winning strategy, this time it is likely to consign us to defeat.
Neither finance ministers nor central bankers should mislead themselves or the public with the promise implied by talk of when interest rates come down.
Nor does the PM show any sign of knowing how to keep his followers’ spirits up during the conquest of inflation.
The Prime Minister insisted in a sombre tone that the conquest of inflation is what will help mortgage holders.
I suggest an “all-monetarist shortlist” for appointments to the Monetary Policy Committee in the near future, to address the collective delusions that blessed us with this current bout of inflation.
While no-one should be complacent, the initial evidence is that current problems are specific and not systemic.
Recent problems with Silicon Valley Bank and Credit Suisse are examples of the stress that interest rate rises are putting on the financial system. But relaxing monetary policy now risks entrenching inflation.
It exercises its independence selectively, and losses can generate a huge bill for taxpayers with no oversight from ministers.
We now have created a situation where the OBR is effectively setting the immediate stance of fiscal policy. If economic expectations are poor, the finances look poor, so austerity or tax hikes follow – but these in turn make the economy and finances worse.
It will not be as deep as the recession that followed 2008. It is expected to see 2.9 per cent knocked off national output, compared to the 6.3 per cent decline back then.
I cannot think of a time when market confidence was plummeting in both the Chancellor or the Governor of the Bank of England at the same time. If neither is up to the job, both should go.
“I don’t mind if the government is in trouble, I do mind very much what’s happening to our country”, says the former Chancellor.
“You can trust me to do what it takes. The status quo is not an option. That is why we can’t give in to the voices of decline.”
This is going to be an investment-led recovery, which not only makes the UK a more attractive place in which to invest but also directs new investment into parts of the country which need it most.