George Osborne has good grounds for painting a bright picture of Britain’s economic future during his speech to the Tory party conference yesterday.
The chancellor was always going to talk up the achievements of his five-year tenure at Number 11 Downing Street – and moreover, he is keen to be seen as a man with a vision, a future occupant of Number 10, rather than merely a deficit-cutter.
No politician wants to be remembered as a prudent accountant. But even Osborne was moved to insert a note of caution into his diagnosis of the economic outlook.
Somewhat amusingly, he is surely the first British chancellor to bring up America’s non-farm payrolls data during a party conference speech.
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“The latest jobs numbers from America are disappointing,” he said, also citing concerns over the Eurozone and China. “I look at the world… and I see a lot of economic risk out there.” He’s not alone.
Stocks may have turned green yesterday, but this has been prompted, to some extent, by a string of negative data. Rate hike predictions, on both sides of the Atlantic, have been pushed back yet again.
Following on from last week’s US payrolls figures, yesterday delivered bad news on this side of the pond. A leading purchasing managers’ index suggested that the UK economy may have grown by a meagre 0.3 per cent in the third quarter.
The index has dropped “down into territory associated with the Bank of England considering more stimulus rather than rate hikes”, said economist Chris Williamson, who collects the data.
Meanwhile in Greece, the government expects an economic contraction of 1.3 per cent next year, after a 2.3 per cent decline this year.
It may be a small part of the single currency, but Greece’s woes show that the Eurozone crisis is far from over.
The Conservatives won this year’s General Election at least partly because Labour’s negativity failed to resonate with large swathes of the electorate. Low unemployment, growing wages and weak inflation are a huge boon to Osborne, who insists he will “go on fixing the roof while the sun is shining”.
Given the size of the deficit, we hope he is right – and the chancellor himself will be hoping that storm clouds from elsewhere in the global economy don’t gather to scupper his plans.