Far from things getting better for the economy, under Osborne they are getting steadily worse
Rare is the George Osborne speech that does not begin with a roll call of groups that support his spending cuts. Sadly for the chancellor, though, supporters for his historic austerity package are themselves increasingly rare. David Cameron's star guest this week, Barack Obama, was polite but conspicuous in his disagreement with the coalition's one-track stance. "We've got to make sure that we take a balanced approach and that there's a mix of cuts, but also thinking about how do we generate revenue," said the president. Then there was the chief economist of the Organisation for Economic Co-operation and Development, Pier Carlo Padoan, who said there was "scope for slowing the pace" of cuts. Given how much the coalition has made of OECD approval for its policies, this is extraordinary.
The chancellor's newfound loneliness matters both economically and politically. Economically, those OECD comments followed on from its admission that prospects for the UK are getting worse. Last May the thinktank predicted that UK GDP would grow 2.5% in 2011; yesterday that forecast was cut (yet again) to 1.4%. That is higher than the prediction from the chancellor's Office for Budget Responsibility, but the OBR has also reduced its expectations for economic growth time and again. The Bank of England has had to do the same, and so have a whole host of private-sector forecasters. True, other countries have fallen subject to the same fate – but not so dramatically. The consensus is clear: far from things getting better for the economy, under Mr Osborne they are getting steadily worse.
Flick through the economic reports published this week and the same plangent theme sounds again and again. The CBI reports a "sharp" decline in trade for restaurants and other consumer-service firms over the first three months of this year. That is backed up by the detailed GDP figures this week showing a slump in household spending, to its lowest level since the height of the banking crisis. The chancellor's answer to how Britain emerges from its slump is a boom in business investment – but that collapsed 7.1% in the first part of the year. There is no good way of playing these figures – just like those big-picture forecasts, they are not going the government's way.
A canny tactician, Mr Osborne sold his austerity plans to the public as being the tough medicine prescribed by every economist going. Yet one by one, his allies – whether in the CBI, the G20 or the OECD – are distancing themselves from his policies. The chancellor may have claimed to be the consensus once; now he is out of sympathy with both the centre ground and economic reality.