Few politicians’ fortunes are as volatile as those of George Osborne. He became shadow chancellor at the age of 33, and managed David Cameron’s leadership campaign, before nearly losing his post over the Oleg Deripaska affair. He delivered one of the most calamitous Budgets in recent history (the “omnishambles” of 2012) and was booed at the Paralympics before achieving both economic and political recovery.
This year’s close has conformed to this long-established pattern. In May, Osborne shared the credit for the Conservatives’ victory and became the favourite to succeed Cameron as prime minister. But since the tax credits imbroglio, his ratings among both Tory members and the electorate have fallen sharply. His lead over Boris Johnson among the former shrunk from 21 points in September to three, while he led Jeremy Corbyn by the same amount in a recent Opinium survey. The boos he attracted at the London premiere of Star Wars recalled his past humbling.
Economic indicators are similarly worsening. Borrowing rose in October and November (albeit partly due to one-off factors) and borrowing for the financial year to date now stands at £66.9bn, a reduction of £6.6bn compared to 2014 but just £2bn short of the OBR’s 2014-15 forecast. In the absence of the best performance since 2000-01, Osborne will miss that target. Should the public finances prove less healthy than initially thought by the OBR, he will have to impose additional tax rises or spending cuts to meet his ambition of a surplus.
After yesterday’s poor borrowing figures, GDP for the third quarter was today revised down from 0.5 per cent to 0.4 per cent. The emerging markets slowdown, further austerity and excessove household debt all threaten continued growth.
In 2016, Osborne will face perhaps his greatest test to date when an in/out EU referendum is held. Were the Chancellor, who is leading the UK’s renegotiation, on the losing side he would struggle to resist demands for his resignation (in common with David Cameron, he will campaign for In). None of Osborne’s foes have yet profited from betting against him. The question for 2016 is whether that record will finally end.
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