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17.02.14

Autumn Statement review: It’s Reagan ’84 vs Reagan ’80

I had this on Labour Uncut last year after the Autumn Statement

Barack Obama’s second term was meant to pivot. From the Middle East which has sapped American military resources and moral authority, to the Pacific, the new crucible of economic and political power. Then the Arab Spring was followed by the disintegration of Syria, the reassertion of Egyptian military rule and such intense strife that the US could not pivot from the Middle East. Even as the rivalry between China and Japan gets hotter.

Barack Obama couldn’t pivot but George Osborne wants to. From pessimism to optimism. From recession to renewal. From the micro to the macro. There are a series of pivots that the Autumn Statement attempts, which are a claim for the most prized piece of political real estate that no one in this parliament has been able to make their own: the future.

88% of Chinese have an optimistic economic outlook, according to Pew. In contrast, only 15% of Britons do. This doesn’t tell of the innate sunny outlook of the Chinese and the persistent gloominess of the British. It tells us that people can see what is in front of their eyes.

The dizzying skyscrapers and rapid economic change convince the Chinese that the future is theirs. The British fear that our best days are behind us. That our children will not enjoy the opportunities that we’ve had. That the country that gave the world the industrial revolution can no longer earn its crust in the era of the digital revolution.

In advance of the Autumn Statement, David Cameron led a trade delegation to China. The Statement revealed improving growth and public finances figures. It remains to be seen whether these figures and initiatives like this delegation come to convince us to believe in the future.

Labour’s successful campaigning on the cost of living militates against this. Last month, a Populus survey found that 38 per cent of voters agree that there is a national economic recovery under way but that only 11 per cent feel part of it, as Matthew D’Ancona has noted. We increasing see a recovery, which the Statement re-stressed to us, but it seems a recovery for the few, not the many, which Labour’s cost of living campaign wants us to think.

D’Ancona called on Osborne to use the Statement to show he believes in an “equality of worth”. What is at the kernel of both this sentiment and Labour’s cost of living campaigning is a contention that the pie can be more equitably shared. As powerful as this contention is, it will take more than this to move the British closer to Chinese levels of economic optimism. We need also to be persuaded that the pie will be bigger.

I’m an optimist about the world, Osborne told us at conference. His Statement was an attempt to make us optimists too by articulating the stuff of a “responsible recovery”. This sought to move beyond “the mess that Labour left us” to look ahead to a brighter future – provided we don’t slip back to the supposedly irresponsible ways of Labour spending.

Polly Toynbee is unconvinced, unsurprisingly. She found the Statement a study in pessimism. Which, I suspect, understates the extent of Osborne’s ambition. My instinct is that he’s as obsessed with Ronald Reagan’s 1984 presidential campaign, as Labour is with his 1980 campaign.

In 1984, he said: It’s morning again in America. In 1980, he asked: Are you better off now than you were 4 years ago? Labour hopes to condemn Osborne as Reagan slammed Jimmy Carter, a disappointing one term president, in 1980. Osborne not only wants to rebut this. But to craft an attack that gives Britain a new confidence in the future, as Reagan succeeded in doing for America in 1984.

Whether such confidence can be built through a recovery based on debt and a housing bubble seems doubtful. Osborne can no more achieve this pivot than Obama can disentangle himself from the Middle East. Labour, however, can pivot. From a party that has convinced people that it can share the pie more equally to one that can also make the pie grow more quickly.

As Patrick Diamond notes, Labour is regarded by voters as a party of fair distribution, not of production and economic growth – yet Labour’s entire governing prospectus is predicated on the party’s capacity to return the British economy to expansion. Labour should think less about Reagan in 1980 and more about him in 1984. Not least as there are numerous reasons to think the steam will run out of our cost of living campaigning before May 2015.

It can be morning again in Britain. But Osborne cannot deliver this morning, as he persists with an economic model that deepens, rather than overcomes, the weaknesses that bedevilled our economy before, during and after the 2008 crash. Labour can, however, bring this morning. Articulating this future should be as much Labour’s priority as getting as much mileage as possible from our cost of living campaigning. This future is unwritten.