The big lie of economic success may still not save the Tories

http://www.theguardian.com/commentisfree/2015/apr/29/big-lie-economic-success-may-not-save-tories

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The warning couldn’t have been more timely. When all else is failing, David Cameron and George Osborne have always banked on the economy to see them through. We can expect to hear of little else for the next week. “The long-term plan is working,” they insist; don’t let Labour ruin it. Boris Johnson, the man waiting to take Cameron’s job, even claimed last weekend that “the economy is going gangbusters”.

Presumably he was relying on the fact that even if it’s scarcely booming, the British economy has at least been growing after years of slump and stagnation. But the signs are it’s all starting to fall apart again. Quarterly growth has now been revealed to have halved to 0.3% in the first three months of the year. Production is down, construction is down.

City commentators have tried to dismiss it as a blip. But on Monday, the Confederation of British Industry reported slowing manufacturing output and mothballed investment. Without the dramatic fall in oil prices, Britain might even be heading back into recession on the eve of a general election.

Related: Coalition has presided over plunge in living standards, says TUC

In the circumstances, quite how the Conservatives and Liberal Democrats have managed to present themselves as economically competent might be thought something of a political mystery. By any objective measure, they have been an outright failure, including in their own terms. The idea that the coalition has presided over an economic success story is simply bizarre.

Britain’s national income per capita is still below its pre-crash peak. Cameron and Osborne inherited a growing economy in 2010 and snuffed out recovery with savage cuts and tax increases. When it finally resumed, the coalition delivered the slowest recovery on record, with barely 1.5% average growth over its five years in office.

This was achieved by a cultish fetishisation of the deficit and debt as the central focus of economic policy, in defiance of both economics and evidence – as the Nobel prize-winning economist Paul Krugman argued in the Guardian this week. The result has been that every one of Osborne’s key economic targets was missed and had to be abandoned, including clearing the deficit and cutting debt as a share of GDP by this year. So they quietly changed the plan in 2012, pulled back on the most extreme austerity and used housing credit to deliver some growth.

But the deficit and debt are just the half of it. The abject economic failure of the Tory-Liberal Democrat government covers the full range: from falling living standards for the majority, a ballooning trade deficit, rampant job insecurity at work, a shocking productivity record, escalating private debt and stagnating business investment.

Even when it comes to the Tories’ proudest boast of 1.8m new jobs, they are the flip side of falling productivity, still below pre-crisis levels. As cosseted corporations have opted for a cheap, often migrant workforce instead of investing their cash mountains, the result has been mass underemployment, agency working, short and zero-hours contracts, bogus self-employment and rampant low pay. As to “rebalancing” the economy, there has been none.

Why any of this should be considered a feather in the cap of the coalition is maybe only clear to those who don’t have to experience its consequences. And why anyone would want to stick with a failed plan, or believe the Conservatives’ and Lib Dems’ next round of promises on deficits, debt and new taxes – with or without another pledge to put them into law – is anybody’s guess.

Clegg has made absolutely clear his preference for another coalition with the Tories

There are some people, of course, for whom the plan hasn’t failed at all: the 1,000 richest people whose wealth has doubled, or the corporations and executives whose taxes have been slashed as the state has shrunk – while the low-paid, unemployed, disabled and food bank users have taken the brunt of the Tory “consolidation”.

And now they’re planning to do it all over again: £12bn of cuts in “welfare” – for which read incapacity, housing and child benefits and tax credits – and £13bn to unprotected departments. A new wave of austerity threatens once more to bring the economy to a halt and derail the Tories’ own plan and targets.

But Nick Clegg seems determined to sign up for a second partnership for economic failure. By ruling out backing for a government that relies on “life support” from the Scottish National party last week, the Lib Dem leader made absolutely clear his preference for another coalition with the Tories. In fact, he as good as ruled out supporting a Labour government, since on current polling Miliband would clearly need SNP votes in parliament. And since the Lib Dems are also committed to a balanced budget by 2017-18, that would also mean signing up to Tory welfare cuts.

It’s only possible to present the coalition parties’ failure and incompetence as their strongest card because of a relentless media campaign, the City and corporate interests that stand behind it and Labour’s partial acquiescence in the face of the austerity juggernaut. A taste of the deranged intensity of the press onslaught on the Labour leader could be found on the front of the Daily Mail yesterday, which had him as a “Stalinist land grabber” over Labour’s popular housing policies – as well as in Rupert Murdoch’s leaked instructions to his British newspaper executives to be more aggressive in their defence of the government and attacks on Miliband.

It’s in deference to the climate created by those interests that Labour leaders added a last-minute “budget responsibility lock” on deficit and debt reduction to their manifesto earlier this month. That’s despite the evidence that Labour voters have been switching to the SNP in Scotland because they see Labour as “too close” to the Tories on the big issues.

The irony is that when it comes to austerity, there’s up to an estimated £50bn spending gap between Labour and Tory plans. And despite their public differences over austerity and cuts, the Institute for Fiscal Studies argues that the SNP and Labour are in fact close when it comes to the actual numbers.

Which is just as well, given the state of the polls, for anyone who wants to see a real change in economic policy after the election. One thing is clear enough. The Tory and Lib Dem propaganda of success on the economy is running up against the reality of falling living standards and insecure low-paid jobs. Even with endless repetition, the big lie of Tory economic competence may yet not be enough to save their bacon.

• Jonathan Freedland is hosting Guardian Live: Election results special on Friday 8 May at 6pm in Kings Place. For full details and to book tickets, see here

• Polly Toynbee/HM/OJ etc is a panellist at Guardian Live: Election results special on Friday 8 May at 6pm in Kings Place. For full details and to book tickets, see here