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Hard political choices for the voters

by Martyn Eden

Economists predict that by mid-year the longest and deepest downturn for a century will be over. Together with falling unemployment, inflation and predictions of 2.4% growth next year, some bragging by the Government was expected. But the Chancellor refrained and cautioned 'there is much still to do'. 

The recovery has largely been driven by consumer spending. Much of the growth has been in the services sector and not enough from investment in the manufacturing and construction sectors. The Chancellor expects that will change as confidence grows but until it does the recovery is unbalanced and unsustainable. As unemployment comes down the pressure on the Bank of England to raise interest rates will grow, causing problems for those with big mortgages and credit card debts. That is why the Chancellor talks about the need to rebalance the economy – shifting the drive for growth from consumer spending to business investment. 

This is highly political. It means continued cuts in public expenditure after the election. Ed Balls says Labour will match the Coalition's spending plans but the Institute for Fiscal Studies thinks he means the present measures, not new ones after the election. Will voters feel they have suffered enough and choose the softer approach or opt for finishing the job of clearing the debt burden? 

The second major domestic issue this week has been the flooding in Somerset. Many homes have been under water since Christmas, provoking angry demands for Government action. The Environment Secretary visited the area and the Prime Minister ordered more pumps to be provided. A decision to discontinue dredging the rivers is blamed for the extent of the flooding. Mr Cameron has promised that once it is safe to do so dredging will be restarted. Meanwhile the Government is looking for ways to help the flood victims.

Internationally, the Government has bowed to pressure to take more Syrian refuges. Hitherto it has given £600 million, provided food, clean water, and medical aid. The Foreign Secretary has also played a leading role in the diplomatic search for peace. However, the current political sensitivity about immigration made the Government reluctant to sign up to the UNHCR scheme for relocating the 2.4 refugees. There are already 3,500 Syrian asylum seekers here and under pressure from all sides of the political spectrum the Government has now agreed to take a few hundred women and children refugees, especially victims of sexual violence. They will be given visas to come to Britain, initially for three years. A question now is how ready the voters are to be Good Samaritans for these Syrian refugees? 

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