When David Cameron yesterday said there would be no “swingeing cuts” in the first year of a Tory government was it proof that he is in retreat over the issue?
Lord Mandelson would appear to think so: accusing Cameron of becoming “a little wobbly under pressure”.
The FT Weekend on Saturday carried the front page story that Cameron was softening his line on the need for cuts after he told an audience at Davos that this year’s public spending reductions would not be “particularly extensive”.
So what’s going on?
Last year’s GDP figures were widely seen by the media as bad news for Gordon Brown. A measly increase of 0.1 per cent for the last quarter of 2008 showed that the economy was still in the doldrums.
A more sophisticated analysis suggests that the feeble data may not be all bad for the prime minister.
a] Voters are more inclined to elect a new government if they know that economic recovery is already underway. When jobs are visibly on the line people have a habit of becoming more cautious.
b] The cuts rhetoric sounds harsh if the economic revival is in doubt. A Tory MP told me last week that the timing of the cuts would have to depend on the next few sets of GDP figures (first and second quarters of 2009). If they are sluggish – or show a fall in GDP – the cuts could be delayed or reduced, he said. This may sound like common sense but it does, as we have already seen, leave the Tories open to charges of making a volte-face.
UPDATE
Peston has a great blog on how the new Tory uncertainty could damage Britain’s ability to borrow cheaply
Jim Pickard
Kiran Stacey