Blog post co-authored with Chris Kirlkand.
The Autumn Statement was supposed to be a celebratory moment for the coalition government – with its deficit-reduction strategy nearing completion and the 2015 election on the horizon, pre-election giveaways could begin. But, in his last update on the state of the UK economy, we find George Osborne in a highly defensive posture. And influential think-tanks such as the Resolution Foundation and the Social Market Foundation are now giving credence to the idea that the Liberal Democrats and the Labour Party may have more credible post-2015 deficit reduction strategies than a majority Conservative government.
The question of how we got here, despite the resumption of steady growth, seems to be genuinely puzzling Osborne and his hand-picked forecasters, based at the Office for Budget Responsibility (OBR). Our work at the Sheffield Political Economy Research Institute examining OBR fiscal and economic forecasts since 2010, however, shows that the Conservative Party’s support for a services-led, low-wage recovery failed to make any meaningful progress on deficit reduction.
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Image: Gareth Milner