Going for growth

On the one hand, there is broad backing for the policy of spending cuts, low interest rates and tax hikes such as the VAT rise. Yet, on the other, the report’s grim outlook for growth is a timely reminder of the Chancellor’s woeful lack of any meaningful strategy for achieving this.

Mr Osborne seems to have built all his hopes on the private sector leading the recovery, yet the private sector stubbornly refuses to do his bidding. There is little sign of any major increase in activity in manufacturing, while retail sales are still down on last year and shops are continuing to close, as a walk down almost any high street will testify.

The danger now, with the IMF predicting that the Chancellor will miss his key target of eliminating the structural deficit over the next five years, is that Mr Osborne will be tempted into further tax rises when, in fact, it is the opposite that is required.

The Chancellor has to think about selective tax cuts to boost consumer confidence and encourage private-sector investment. The VAT rise might be bringing in more money for the Treasury, but it is also further squeezing household budgets. And it is high time that, instead of voicing airy intentions about reducing employers’ costs and doing away with high tax rates, the Government took decisive action to achieve these aims.

For the harsh reality is that, while Mr Osborne is right to believe that recovery can only come through the private sector, present conditions are so tough that business needs all the help it can get.