George Osborne must be having a great day. First, he wakes up to hear Evan Davis interviewing US Treasury Secretary Timothy Geithner on the Today programme.
Davis clearly wants Geithner to say that Osborne is cutting too fast; but he won’t. Instead, when Davis leads him on with: “Isn’t Osborne wrecking the chance of growth in the UK?” he just says “I don’t see much risk of that at the moment.” He goes on to say that he is “very impressed” by George Osborne and the “very remarkable thing” he has done in making tough choices in a hurry and “building in reforms” that are “very good” along the way.
Then he adds a little icing to the whole thing by both pointing out that Osborne is dealing with problems “not related to this government” and then having a go at Gordon Brown for his light-touch regulation and the way it was “designed consciously” to steal financial business from New York and Frankfurt. That policy, points out, Geithner, made our banking system far too big relative to the size of our economy and turned out to be “deeply costly”.
Geithner doesn’t give many interviews, and he both looks and sounds very clever and very serious. So that’s nice – for Osborne at least. But even as Osborne was basking in that glory came the next happy event – the announcement that the public finances were in surplus in January. Public sector net borrowing showed a surplus of £3.735bn. That’s rather better than the consensus forecast for the month of more like nothing.
This isn’t that big a deal – income tax payments mean there is usually a surplus in January. But it is a significant rise from the deficit of £1.266bn recorded this time last year and does put the government sort-of on track to meet its targets for the financial year to March: note that for the year to date the deficit stands at £85bn against £91.8bn this time last year.
It is still a vast deficit contributing to a vast national debt, but after a few weeks of rubbish data, any suggestion that their strategy might be working even a little should give the coalition the heart to stick with it.