Osborne needs to start explaining Plan A, or work on Plan B
Posted on 4 June 2011 | 10:06am
There is something to be said for George Osborne’s modus operandi – which is to set bold strokes, speak in public when he has to, but otherwise keep his head down.
It is an approach, however, which suits itself better to strategies of blinding clarity where the steps being taken will almost certainly lead, all things being equal, to the outcomes predicted for it.
However, even the most benign analysis of economic indicators at home and abroad – more bad news from the US yesterday – would suggest that is not the economic enivoronment in which the Chancellor finds himself.
Take the latest report from Markit, which analyses activity in the UK services, manufacturing and construction sectors, and which is now predicting growth in the second quarter of the year to be just 0.3 per cent, down even on the 0.5 per cent of the first quarter.
The purchasing managers at services companies reported that their businesses expanded in May at their slowest rate for three months. This follows a similar Markit survey in the manufacturing sector earlier in the week, leading the analyst to warn that the Bank of England may need once again to downgrade its growth forecasts.
There was an interesting observation too in the report by The Office for National Statistics on construction orders, which showed a drop of almost a quarter during the first three months of the year, the sharpest fall since 1987. The companies hardest hit are explicit in stating that the fall is linked to the working through of cuts in public sector investment.
Of the many big holes at the heart of Osborne’s Plan A one of the biggest has been the assumption that the private sector will fill the jobs gap left by the public sector cuts. I have never heard Osborne, or anyone else, explain how that is to happen.
That might explain his relative silence. However, as one of the few genuinely powerful figures in the government, he is reaching the point where he either needs to step up his explanation efforts, or he needs to be dusting down Plan B.