Bernard Ingham: Time to show nerves of steel and stick to the hard road ahead

Thank goodness Margaret Thatcher agreed against her better judgment to Britain entering the European exchange rate mechanism in 1990. Two years later we were expensively blown out of it on Black Wednesday.

We owe John Major and Kenneth Clarke a debt of gratitude for rebuilding the economy after that debacle and Gordon Brown for learning the ERM lesson and keeping us out of the euro. It may be Brown’s only redeeming feature but it is a considerable one.

Let us also be thankful that, however shambolic the coalition is becoming, we have had 
David Cameron and Nick Clegg these last two years instead 
of the two Eds – Miliband and Balls. As a result we have at least a chance of recovering our equilibrium, if not necessarily soon.

Which brings me to the Budget. The real danger today is that the Chancellor, under a host of pressures including from his own somewhat deranged party, 
will do something silly just 
as the economy is turning the corner.

Both the Prime Minister and the Governor of the Bank of England have been tentatively upbeat. Cameron has seen grounds for cautious optimism and the Governor, who would like to go out on a high, has even claimed recovery is in sight and will pick up this year.

Unfortunately, nobody can be sure. While there is growing optimism in the USA, helping to drive the FTSE index to a five-year high, there is growing pessimism in the Eurozone. As Cyprus now shows, keeping the euro and the great European integration project artificially alive is testing Europe’s social fabric to breaking point.

Cameron’s “long hard road” ahead is far more realistic than the hysterical hooligans in his party who are threatening a coup if, among other things, the Budget flops politically. On the evidence of the ConservativeHome website, things cannot get much worse with only seven per cent of the party believing they can win the next election.

So far the Chancellor, backed up by Cameron, has behaved sensibly. I do not believe he cut deeply enough in 2010 or subsequently but he has shown admirable consistency of purpose. Today we shall discover if he has nerves of tempered 
steel.

The last thing he should do is listen to Balls, who wants a cut in income tax funded by a temporary rise in borrowing. Nor should he bow to our silly Business Secretary, Vincent Cable, who thinks taxation is not taking a big enough strain in reducing the deficit.

The plain fact is that until this country repairs the damage caused by Brown and Balls – and yes, Ed Miliband – and returns this land to a balanced budget we shall be in potential trouble. We cannot thrive so long as we have a budget deficit of around £120bn. And that means spending has to be slashed.

The coalition may have cut the deficit by 25 per cent since 2010 – though that seems to overstate the case – but so long as we have to borrow umpteen billions to finance what is left the longer we shall languish in the economic doldrums.

We can no more live on rising tick as a nation than we can as individuals.

If the Chancellor could slash taxes in the certain knowledge that it would bring forth growth, I would be the first to urge him on. Wherever he can prudently ease the burden on the people he should do so.

But those people are not as stupid as Balls. They know – and this is reflected in opinion polls – that there is no alternative to reducing expenditure.

We have been living beyond our means as Labour tried to bribe us for our votes on an industrial scale.

The main cause of six years of stagnation may have been the financial crash but Labour’s reckless spending was a symptom of the hubris and it has cruelly constrained the coalition’s room for manoeuvre.

We would be sitting fairly comfortably without Brown’s legacy of debt.

So, the last thing we need today is a Chancellor flashily playing to the gallery. If he can find a way of offering a token of tax cuts to come and spurs to the growth machine, all well and good.

But he will blow everything by taking his eyes off our pile of debt just as surely as Thatcher would have done if she had turned in 1981. Per ardua ad astra.