Vince Cable’s speech to the Royal Economic society is being reported as undermining the Chancellor in his pursuit of a budget surplus. This misses the point, as Vince is rightly focussed less on the ins and outs of Westminster politics and more on ways to generate real sustainable prosperity in the wider economy.
In his speech he set out the Lib Dem approach to the economy in light of a number of facts overlooked in the recent media frenzy over encouraging headline stats on GDP growth and employment. Serious imbalances remain in the UK economy, whether viewed from a regional perspective (£) or as regards economic sectors, so Vince is absolutely correct to say that obsessively pursuing an absolute budget surplus by a set date will undermine the sort of recovery we desperately need – one that allows for substantial investment in our creaking infrastructure and sees sustainable prosperity reach beyond London and the South East. With house prices soaring in these regions – but stagnating elsewhere, along with job creation and productivity – it should come as no surprise that the recovery taking hold is of ‘the wrong shape’ – the only surprise is that pointing this out is seen as an act of coalition rebellion, not a warning to the country about the economic choices we face.
We will post a more detailed analysis later – including reflection on how the party’s economic platform is evolving following the SLF’s amendment to Nick Clegg’s economics motion in Glasgow. What is clear is that Vince is determined to present an economically credible, progressive and above all distinctly Liberal Democrat economic platform – as the Tories test their coalition partner’s resolve by attempting to legislate for crushing austerity in the next Parliament, his defence of a Lib Dem approach to economic policy will matter more and more.