A bullish chancellor will claim [today] that critics of his deficit reduction plans are at a loss to explain why the recovery is now taking place. He will point out that the spending cuts are at their deepest now owing to the backloading of the cuts programme.
He will point to evidence that shows in his view "the last few months have decisively ended [the] controversy" about fiscal policy — as those who advocate a so-called plan B cannot explain recent improvements in the economic data.
I wanted to splutter when I read that, but it's not polite so I swore instead.
Of course it is easy to explain why there is a so called 'recovery' now. There are three reasons.
Firstly unnecessary austerity depressed the economy so much that at some point some form of economic re-stocking had to take place. That is happening, but it's vital to note that the economy remains below its 2008 position and real earnings are so far short of what they are no claim of recovery is in any way credible.
Second, this is the result of the mis-spending of quantitative easing. I am not opposed to quantitative easing per se: in the new Green New Deal report we argue for green quantitative easing to be used to create specific investment in the economy. But the quantitative easing we've had has not done that. £375 billion has been used to create liquidity in the City so we have had share and commodity price booms, which have in turn led to a rapid recovery in bank bonuses and speculative gains for a few, often at cost to the many, not least through inflation that has been higher than necessary.
Third, we now have mortgage subsidies aimed at over-heating the market for existing homes rather than providing the funds needed for investment in the new homes the Green New Deal report highlights the need for.
So we have a failed economic policy followed by froth from what is little more than a bung from Osborne to his mates.
That's the explanation for so called recovery now. And it's also the explanation for it supplying benefit to such a small number of people. As Karel Williams ably argues in the Guardian this morning:
The rhetoric of "recovery" is part of the problem.
That's because this is a recovery for the few at long term cost to the many.
Now where's the opposition?