If we didn't already suspect as much, today's economic news does rather confirm that all that talk about Greece, defaults and deficits the size of a planet were basically hogwash, and the reality, as Whitehall Watch point out, is that we have a government that has a choice.  We can therefore safely judge the outcome not as a foregone conclusion but as the deliberate decision and execution of policy by George Osborne and his backers, and presumably acquiescence by the Liberal Democrats to this choice.

So, what's the news?  Well, first thing in the morning I listen to Absolute Radio, which I'd like to put on record is not my choice, the missus has the radio on her side and has made it clear that changing stations to, say, Radio 4 is a ticket to instant groinal percussion.  Their news is, however, far better than the Today programme (which has this irritating habit of trying to add balance occasionally) in that it gives you pure, unadulterated bullshit straight from the spinners.  Once you realise this it's pure gold, like reading the Field Marshal's thoughts straight off the Enigma.

This morning's main story was of the WORSE THAN EXPECTED FIGURES TO BE RELEASED LATER and that this was BAD NEWS.  Well, up to a point, Lord Coulson - the salient points:

  • Growth forecast's cut a bit
  • However, the deficit would have reduced on target under Darling's plans *anyway*, without Osborne's market-pleasing austerity on top
  • It's all a bit muddled, really
  • This forecasting business isn't actually as easy as it looks, old chap, but we've done our best.  Look, here's the working out.
  • Over to you, George

George's response that 'it couldn't be clearer' needs no further comment.  The reality, as stated above, was to make it clear that sticking with Alistair Darling's last Budget was an option the new Government could have taken that made sense on economic grounds, in that it would not have led to instant default or downgrading and would have reduced the deficit over time.  It was an alternative to what Osborne has in store, therefore.

Naturally all this hedging of bets has not gone down well with the Conservative Party's internal Government in Exile at the Telegraph, where prominent ultra Fraser Nelson follows up a previous blog piece by the Economics Editor Ed Conway which pointed out that the finances are about as bad as they were thought to be a couple of months ago while the deficit was less than forecast with this bizarre article that appears to accept this and instead advocates using spin as a cover for ideologically driven cuts in public spending.  Well, yes, obviously, but it's incredible that he's being this open about it.  I quote:

The Chancellor is a week away from an emergency Budget and had hoped to advance a clear narrative: that things are much worse than thought, so the cuts will have to be deeper than he had admitted during the election campaign. But, embarrassingly, the economy is not playing along. Things just keep getting better.


How awful.  Those grotty Socialists didn't even have the decency to leave things in a big enough mess to justify taking the country back to the days of the Poor Law:

The new Office for Budget Responsibility (OBR) was intended by the Tories to be an authoritative, independent voice telling the truth about Britain's public finances

It's immediately obvious that, to Fraser, the important thing is the presentation even in a body intended to promote transparency in government.  We've seen this special type of accountabilitiness in Boris-run London, of course, where the important thing is not that data are released in a useful or revealing fashion but that it's covered as a major innovation in accountability by the Conservatives.  So what is the *real* point of this, then?

Mr Osborne will have to change tactics. He cannot credibly play the worse-than-we-thought card if Sir Alan's team – on whom he has bestowed Delphic authority – disagrees. Instead, he will have to focus on something from which he shied away in opposition: the moral case for cuts

The 'moral case for cuts', ladies and gentlemen, or in other words, 'who are you going to believe, the slightly rosier economic indicators from the new quango that's supposed to be independent and trustworthy, or the ideology of the Tory low-tax millionaire squad that bought this election, dammit, and want the Full Canada Monty, and want it now'.

Actually, I pinched that line from Paul Krugman, who has already shot Fraser's fox for him with a well-aimed multiple broadside at the austerity hawks:

the demand for immediate austerity is based on the assertion that markets will demand such austerity in the future, even though they shouldn’t, and show no sign of making any such demand now; and that if markets do lose faith in us, self-flagellation would restore that faith, even though that hasn’t actually worked anywhere else.

So Fraser doesn't have the Government backing him and rather more worryingly for a hardcore Thatcherite doesn't appear to have the markets backing him either, and the business community seem to be on the verge of shitting themselves.  Still, at least the whipped dogs at the BBC can be relied upon to bend reality to please the new master:

The lower figure will likely increase the impetus of the coalition government to cut public spending, as lower growth means fewer tax revenues. 

thus neatly avoiding any mention of either the existing cuts in spending under the previous budget or the higher than anticipated tax revenues.  For that matter, lower growth than expected means *don't* cut, under any sane operation - it's only safe to withdraw the heart-starter when the thing's actually picked up the beat itself, not when strong rhetoric leads to weaker business confidence and thus threatens the very recovery it's relying on to help cut the deficit.

Finally, Chris Dillow can always be relied upon to muddy the water by inconvenient deployment of facts, and he duly points out that an interest burden of 3.7% of GDP while not brilliant is hardly unprecedented:

On the one hand, this is a lot - it’s almost twice the ratio we had in the early 00s. 
On the other hand, though, its not absurdly high. It’s less than we paid in the early 1980s, when debt was low but interest rates were high. And it’s less than we paid in the late 40s and early 50s, when debt was high but rates low
 

Indeed.  1948 is the example given, when it was rather higher, at 4.3%.  That was the year the railways were nationalised (and full price paid to the shareholders, which not many people realise) and the NHS established.  Would anyone likely to give me decent odds on even just the former of those two fine progressive achievements coming along in the next five years?  Come on, it's not like we have a World War to recover from, is it.