Mark Field is the Member of Parliament for the Cities of London and Westminster and currently serves as a member of the Intelligence and Security Committee. Follow Mark on Twitter.
Recent weeks have confirmed that politics can be a strange and unpredictable trade.
Barely three years ago, the Coalition came into office pledging to eliminate the UK’s structural deficit within a five-year term. Cumulative public sector net borrowing between 2011-12 and 2015-16 was forecast at £322bn. The voters were warned in terrifying terms that any larger a deficit would result in explosively higher long-term interest rates. As a consequence, Labour’s plans to borrow an additional £50bn over the course of the parliament were derided by coalition ministers as irresponsible and potentially ruinous to our economic health.
The outcome of near stagnant growth since then means, according to the OBR’s own projections, that five-year borrowing will come in at £539.4bn, almost £220bn more than planned. Yet what would have been regarded as reckless over-borrowing only three years ago has had negligible impact on interest rates (for now at least…)
By rights, this might have been seen as a glorious vindication of Labour’s consistent contention that the UK government could, and should, have borrowed more in classic Keynesian style since 2010. By contrast, this grisly outturn in deficit reduction plans has instead persuaded the Opposition that it should stick firmly to the Coalition’s spending proposals for 2015-16.
George Osborne’s tactical gambit some weeks back of announcing a single year Spending Review so early for the first year of the next parliament was reasonably transparent. It was clearly designed to put Labour on the spot – should it show some leg now or hold back, lying low and not committing itself to its own plans on spending and, more toxically, welfare until the run up to May 2015?