The Conservatives’ economic policy: what are they up to?
A lot of people I speak to are expressing some bemusement at the Conservative Party’s increasingly hard line on Brown’s fiscal stimulus policy and are trying to come up with explanations. Many wonder if Osborne’s and Cameron’s recent statements represent some irresistible pressure for a return to full-blooded Thatcherism demanded by the Tory grassroots and The Daily Mail. I myself have wondered whether Tory backbenchers’ tolerance for Cameron’s dalliance with progressive social policies would not extend to progressive economics leaving him no choice but to stake out a clear opposition. How else to explain an approach that is doing nothing for their poll ratings?
But then I remembered those Conservative election posters from 2001 (I could have sworn it was 2005 but apparently not) which asked “you paid the taxes, so where are the nurses/police/teachers?” Could it be that Team Cameron are pinning their hopes on the fact that whatever Brown does now stimulus-wise, he will only limit rather than prevent a very tough recession? If so, cue an attack in about six months along the lines of “You’ll be paying the taxes soon, so where are the jobs?” It will be difficult for Brown to prove that he effectively ameliorated the recession above all the inevitable noise about unemployment, bankruptcies, repossessions and high public debt.
Obviously if the Tories supported Brown now, they would not be in a position to mount such an attack in a few months. So they have to make the public spending u-turn pronto.
Anne McElvoy had a piece in The Evening Standard today that effectively confirmed this was the strategy although she tied it in with an even older Conservative campaign (which was actually successful) from 1992, when Tory posters screamed about “Labour’s tax bombshell”.
If all this is true, it could prove horribly effective and Cameron may look much less isolated by mid-2009.
There is one serious flaw though. As I wrote in a previous post, when the US Government introduced its fiscal stimulus early in 2008, it’s impact was to create a sudden surge in the economic growth figures for the second quarter of this year. The economy then returned to a recessionary trend – one reason why there are demands for another stimulus package now. If Brown and Darling are sufficiently bold in the Pre-budget Report on Monday, it may just be that they manage to fend off continuing recession for the first quarter of next year. Personally I think this is very worthwhile economically but it could also prove pretty worthwhile politically.
Particularly, if you call a snap election in the Spring …