Bernard Ingham: Prudence and hard choices only way out of lost decade

Spring may have arrived at last but unemployment is up. It is said that stay-at-home mothers are being forced to look for work because of the squeeze.

Fitch has followed Moody’s in downgrading our credit rating. I doubt whether this matters much in view of the rating agencies’ useless performance before the financial crisis. But it is not designed to help Britain recover.

Nor am I duly impressed by the IMF’s recommending Chancellor George Osborne to go easier with austerity. Under Christine Lagarde, the former French Finance Minister, the IMF’s prime concern is to prop up the euro rather than help the world to grow.

So long as 17 different economies, from the careful to the improvident, are held in the single currency’s straight jacket, Europe is condemned to lurch from one rescue to another without ever solving the real problem.

In Britain, whole cohorts of vested interests from barristers in the North West protesting about cuts to legal aid through the poverty lobby to privileged public sector workers are in no mood to accept economies, though they do not appear to be bent on real trouble. Talk of a general strike causes shudders in Labour circles, given that the party is largely financed by the unions.

It is still difficult to judge Britain’s temper. Probably the sane majority recognise that we shall never be free until the public finances are brought under control but profoundly wish they could escape the pain of the operation.

Meanwhile, there is a sense of political drift with only two years to go to an election. The Tories and, to be fair, the Liberal Democrat leadership know what has to be done but, with the possible exception of Chancellor Osborne, are not exactly keen on doing it. And Labour is reluctant to admit responsibility for some of the mess and at a loss how to clear it up in ways it feels are politically acceptable.

Worse still we are now in the sixth year of financial difficulty with little real prospect of wiping the slate clean for another five at least. A lost decade is staring us in the face.

It is as if a great pestilence hangs over the land, even though the people, allowing for their determination to dress down at every opportunity, do not generally look impoverished. Poverty, as distinct from deprivation, is relative rather than absolute.

So, where do we go from here? Well, the first point to be made is to stick with Osborne as Chancellor. Any replacement would probably trigger a crisis. He has at least shown a commendable constancy over the past three years. He should wear his unpopularity with pride. God save us from popular Chancellors. We only need effective ones.

Second, there is a legitimate argument about the pace at which the current £120bn budget deficit should be eliminated.

But one thing is clear: it has not been fast enough so far. The longer it takes, the more it drains us of our wealth in interest charges, diverting what might generate growth out of the country. The era of hard choices is still with us.

Third, whatever the Government does, it needs a resurgent world economy. There are encouraging signs in the USA and the East. But Europe will be a drag so long as it persists in ignoring financial realities in pursuit of a United States of Europe. The eurozone is no help at all. It is frankly a political, financial and economic disaster area.

Fourth, as we work our way out of trouble, all political parties should dedicate themselves to pursuing what have been disparaged as housewifely economics. In the end there is no difference between how you run your home and your nation. The laws of economics apply to both

Eventually, the consequences of spending more than you earn or can afford catch up with you.

We should know by now that recklessness, gambling, animal spirits and hubris are threats to everyone’s well being.

In short, what we need are prudent governments who know prosperity grows out of a sound, solid base. May the day soon come when Ministers compete to bore us to tears with their efficiency. We would then be laughing all the way to the bank, always assuming we were prepared to work.