Britain is not Italy, Greece or Spain. George Osborne will want us to cling to that thought when on Tuesday the chancellor of the exchequer gives parliament his assessment of the economy. Whereas those countries are paying about 7 per cent for new debt, the UK borrows at about 2 per cent. While some of our continental neighbours contemplate economic ruin, we have no difficulty in funding our deficit.
However, the government hardly feels comfortable with our economic progress. Spending cuts and tax rises were designed to calm the market and to shrink the state, leaving light and air for the private sector. Mr Osborne always knew that in themselves those measures were insufficient to tackle the deficit. For that we needed growth.
It must cross ministers’ minds that the grim prospect of five years without growth should now be regarded as the most optimistic scenario. It takes no account of what may happen if the euro falls apart in disorder. Now that it is clear that countries such as Spain are paying crippling interest rates precisely because they are shackled to the euro, it is at best perverse to will the currency to survive, and at worst immoral, given the impact on unemployment and other human miseries. Read more