Economy

George Osborne has been quiet these past few weeks, tussling with ministers desperate to preserve some of their budget from his spending review. Today though, Osborne will emerge from the Treasury's recesses to launch a political attack on the ‘deficit denying’ opposition. Come on, Osborne will ask Darling et al, where are these £44bn of cuts you planned?   And answer comes there none, not even an incredible one. Labour’s refusal to countenance a spending review in government means it has very little to offer the spending debate in opposition.

As Pete notes, Nick Clegg is moderating the debate over the spending review in David Cameron’s absence. It’s an unenviable task. IDS and Liam Fox have been the most cussed opponents of George Osborne, but all ministers are fighting for their budgets behind the scenes. This morning, reports suggest that Chris Huhne could break from the ranks of the silent. The Times gives details of ‘intense discussions’ over the future of nuclear clean-up and renewable energy funding, worth more than £2bn of the Energy department’s £3.4bn budget. Obviously, any reductions in environmentally friendly initiatives carry a political cost for the Liberal Democrats.

One of the challenges facing the next Labour leader will be what to do with Ed Balls. Balls, as he demonstrated in the last few months, has the right mentality for opposition. Labour will need his appetite for the fight in the coming year. But if a new leader makes Balls’ shadow Chancellor, he’ll have a shadow Chancellor whose position on the deficit is simply not going to seem credible to the public; Balls has already said that he thinks the plan Labour went into the election with for the deficit was too ambitious. The Tories are convinced that if Balls is shadow Chancellor, they’ll have the dividing lines they want on the economy. A better department for Balls to shadow would be the Home Office.

As compliments go, there's something slightly backhanded about Vince Cable's claim that, "Having worked with [the Tories] at close quarters, I've been pleasantly surprised that they're not as I'd envisaged them." And that's just one of the little nuggets embedded within his interview with Decca Aitkenhead this morning. The Business Secretary touches on everything from what he thinks of George Osborne ("he's clearly able") to his own ability to craft a joke ("I'm actually quite good at one-liners"). If you want a sense of where Cable is at, then Aitkenhead's piece is worth a quick read.

David Cameron's neatly-constructed article in the Sunday Times (£) perfectly typifies the balancing act he is performing ahead of this autumn's Spending Review. The Prime Minister has to sound tough on the deficit because, thanks to the fiscal brinksmanship of one G. Brown, that's the job he has been appointed to do. But he doesn't want to come across as sadistic or gloomy, lest it alienate voters and coalition partners alike. The edges of the cuts need to be rounded off, made more presentable. To that end, Cameron suggests first that the cuts aren't ideological. There are, he says, items of spending that he'd like to keep – but wider budget constraints mean that he can't.

Few MPs have made quite so many waves recenty as last year's Spectator backbencher of the year, Andrew Tyrie. Under his chairmanship, the Treasury Select Committee seems to have gained a new vitality and edge. And it has certainly accumulated more powers, with the ability to veto the government's appointments to, and dismissals from, the Office for Budget Responsibility. As he put it himself in an interview with the Independent last week, "The fight back by Parliament is beginning now." Just how aggressively he intends to prosecute that fight back is suggested by his comments in the Times (£) today.

In 1690, Thomas ‘Diamond’ Pitt led an opulent delegation of the East India Company’s Madras factors, bearing their wares, to the Nawab of the Carnatic, the richest man in southern India, with the intention of buying him out. They succeeded, but Pitt had nothing on David Cameron’s delegation.  Six cabinet ministers, more than 10 CEOs and God knows how many diplomats are accompanying the Prime Minister. The only person missing is Nick – but that sort of thing is frowned upon by Delhi’s Edwardianly genteel political classes. As I wrote yesterday, pageantry titillates commercial diplomacy, and Cameron is staking everything on this mission.

Tim Montgomerie observes that the FCO now stands for Foreign and Commerce Office. David Cameron is determined to conduct British foreign policy in our economic interest. And, in that spirit, he is off to charm India in the hope of gaining access to that enormous emerging market – last week’s magazine has exhaustive coverage of the trip. Tim also claims that the Foreign Office won’t like this ‘redirection of their mission’. I’m not so sure. From what I hear, the Foreign Office is loving it; it’s just like old times. The FO was marginalised under the previous government; Labour cut staff in embassies and consulates around the globe.