Economy

Has the shadow of Brexit already cost us a slice of GDP — and if so, is it a blip or an omen? The Office for National Statistics says UK growth was 0.4 per cent in the first quarter of this year, down from 0.6 per cent in last year’s final quarter. And we can’t blame the neighbours, because the eurozone upped its game from 0.3 per cent to a positively breathless 0.6 per cent — with even France trotting in ahead of us at 0.5 per cent. We still look stronger on the jobs front, mind you, with our unemployment rate, at 5.1 per cent, well down on a year ago and at half the rate for the eurozone. And our service sector continues to perform quite well.

Downing Street is more confident than it has ever been that the EU referendum will be won. It is not just Barack Obama’s full-throated warning against Brexit that is responsible for this, but—as I say in my Sun column this morning—the sense that they have got the argument back onto their home turf of the economy. Indeed, it was striking how much Obama talked yesterday about the economic benefits to Britain of EU membership and the single market. The fact that this was his main message, rather than Western unity against Putin and Islamic State, shows which argument Number 10 thinks is working.

With the Budget due next week, George Osborne appeared on the Andrew Marr show to warn of the need for further spending cuts. Keen to put forward an alternative vision for the UK economy, Labour's Treasury team have also taken to the airwaves this morning. John McDonnell told Marr of the need for more long-term investment, arguing that at least 3 per cent of GDP should be used for investment compared to Osborne's 1.4 per cent. Alas it seems that Labour's shadow Chief Secretary to the Treasury had failed to catch this. When Seema Malhotra appeared on the Sunday Politics to help explain McDonnell's vision she appeared to lack knowledge of any of the specifics.

Don’t expect ‘fireworks’ from the Budget one of Osborne’s closest political allies told me this week. Ahead of the Budget on Wednesday the Chancellor finds himself hemmed in by the EU referendum, fraying Tory discipline and the worsening global economic situation, I say in my Sun column this week. A Budget four years out from a general election is normally when a government takes some risks. But I doubt Osborne will be doing much of that on Wednesday. First, he doesn’t want to do anything to make the EU referendum more difficult for the government to win—the intensity with which David Cameron is campaigning reveals how worried he is about losing it. Second, Cameron and Osborne know that they can’t rely on Tory MPs at the moment.

Sajid Javid will campaign for Britain to stay in the EU. The Business Secretary’s decision is a blow to the Leave camp which had been hopefully of recruiting him; Javid had spoken in the past of how he was ‘not afraid’ of Britain leaving the EU as it ‘would open up opportunities’. Senior figures on the Leave side had hoped that Javid would help them persuade voters that quitting the EU would not be bad for business. Those familiar with the Business Secretary’s thinking say that what has swung Javid to IN is his sense that it is just too risky for Britain to leave right now given the parlous state of the global economy.

Upbeat or downbeat? I asked last month whether the mood where you live is energised by enterprise or demoralised by public-sector retreat — or both. Replies poured in while the news mostly got worse. Governor Carney warned that ‘the UK cannot help but be affected by an unforgiving global environment and sustained financial market turbulence’ as shares took another dive. BP and Shell announced profit falls and job cuts. The Brexit debate took off, but the migrant benefits row overwhelmed any sensible discussion of economic pros and cons, on which voters must so far be utterly confused. Then again, it wasn’t all bad: like-for-like retail sales surged by 2.

Many have rightly attacked the police for their handling of the demented accusations against Field Marshal Lord Bramall, now at last dropped. They ostentatiously descended on his village in huge numbers, chatted about the case in the pub and pointlessly searched his house for ten hours. But one needs to understand that their pursuit of Lord Bramall — though not their exact methods — is the result of the system. Because the doctrine has now been established that all ‘victims’ must be ‘believed’, the police must take seriously every sex abuse accusation made and record the accusation as a reported crime (hence the huge increase in sex abuse figures).

[audioplayer src="http://rss.acast.com/viewfrom22/thegreatfakewar/media.mp3" title="Fraser Nelson, James Forsyth and Isabel Hardman discussing the Autumn Statement and Spending Review" startat=870] Listen [/audioplayer]The Autumn Statement on 25 November had long been circled in Downing Street diaries as the season’s defining political moment. Its importance only grew after the Lords rejected the government’s tax-credit changes and George Osborne announced that he would present his revised proposals in this statement.

Without George Osborne, we’d probably be living under Prime Minister Ed Miliband right now. His value to the government goes far beyond his brief as Chancellor; he is across most departments most of the time. But as Chancellor, he is judged by the success (or otherwise) of his Budgets – which is why he is now in a moment of great danger. His love of complexity has come to threaten not just his own reputation, but that of the Conservative Party too. Sometimes, Osborne is so clever that he can be downright stupid: This is one of these times. In my Telegraph column today, I say that Osborne is currently planning to soften – but not abandon – his tax credit cuts programme.

George Osborne received a fulsome banging of desks last night at the 1922 Committee, joking that he should come back again once he’s won a vote if he gets that sort of reception when he’s lost. Tory MPs were doing the desk banging for the benefit of those hacks skulking outside, but they are now holding their breath to see what the Chancellor actually comes up with to mitigate the tax credit cuts in the Autumn Statement. Inside the meeting, the Chancellor was upbeat, but made clear that there will be movement on the issue. The waiting game means that David Cameron had to refuse to answer the same question six times at PMQs, and anyone else asked about the issue in broadcast interviews will have to deploy the same duck and weave technique.