An extra £111bn of borrowing over the next five years. A fresh squeeze on public spending. No prospect of any tax cuts before the next general election.
It is easy to see why many commentators have described Tuesday’s Autumn Statement by Chancellor George Osborne as a ‘game changer’ in British politics.
Here we have a government that was elected in order to sort out the nation’s finances and eliminate the budget deficit by 2015 admitting that it will fail in that central objective.
Far from the being able to fight the next election on the sunlit uplands of fresh economic growth following the hard years of austerity, it will now have to do so against a continuing backdrop of cuts.
As the BBC’s James Landale put it on Tuesday evening: “Just as the facts have changed, so must the politics.”
“Until this morning, the assumption had been that the election would be about which party was best placed to use the proceeds of an incipient recovery – what taxes would they cut and what spending would they increase. That debate is now for the birds.”
And yet, and yet…I wonder if the Chancellor’s statement really has altered the terms of the underlying political debate about the country’s economic prospects all that much.
Despite all the economic doom and gloom, and the large slice of humble pie that the Chancellor has been forced to swallow this week, nothing has yet happened to demonstrate beyond doubt either that the government’s prescription is mistaken, or that a better alternative exists.
On the face of it, Labour’s narrative ought to be a compelling one. It is that an incipient recovery that was already under way by the time of the last election was then choked-off by a combination of spending cutbacks and “austerity rhetoric.”
But the public remains to be convinced that Labour’s more limited ambition to halve rather than eliminate the deficit in four years would not have landed us with a different set of problems.
There is also, still, a powerful residual feeling that Labour is really to blame for the country’s economic plight, even though history will surely show that Gordon Brown’s actions at the height of the banking crisis in 2008 saved us from a far worse fate.
This is a large part of the reason why, for all Mr Osborne’s difficulties, the opinion polls continue to show that Ed Miliband and Ed Balls are still less trusted on the economy than their Conservative counterparts.
A real political game changer is the kind of event which transforms the fortunes of the key players involved almost overnight.
Sadly for Mr Brown, his decision not to hold an election in the autumn of 2007 was one such example. After that self—inflicted humiliation, the public never saw him in the same light again and nothing he did was able to reverse that negative perception.
For the Tories, the ejection of the UK from the Exchange Rate Mechanism in 1992 is the one that sticks in the mind, destroying in one fell swoop the party’s hitherto prized reputation for economic competence.
I’m no apologist for George Osborne, but I don’t think being forced to downgrade the growth forecast for 2012 from 2.5pc to 0.7pc or even up the public sector borrowing requirement by £111bn quite falls into the same category.
For all the talk of game changers and transformed political landscapes, I actually find myself wondering whether this week’s events might not help the Conservatives in the longer-run.
If history is any guide, it suggests the answer might be yes. While voters appear to have a habit of ditching Labour governments at times of economic difficulty (1979, 2010) they seem more inclined to stick with Conservative ones (1983, 1992).
The Tories will of course hope that some of the pro-growth measures announced this week – for instance bringing forward £5bn of spending on infrastructure improvements – will have made at least some impact by the time we come to go to the polls again, even if few in this part of the world will have been fooled by the reannouncement of some old money for the Tyne and Wear Metro.
But if not, they could find that their most potent message come 2015 could well be that familiar old refrain: “Keep hold of nurse for fear of something worse.”