“The Tories have chosen this moment to self-destruct” – Anatole Kaletsky

Anatole Kaletsky writes in The Times about the Conservative Party’s problems, and in particular the economic views of George Osborne:

The Tories have chosen this moment to self-destruct, leaving no plausible alternative to Labour, and nobody, apart from the redoubtable Vince Cable, to challenge Mr Brown’s delusions of grandeur – or potential economic misjudgments.

Talleyrand’s famous remark about the House of Bourbon – that they had “learnt nothing and forgotten nothing” – seems to apply with equal force to David Cameron’s Conservatives after their repeated decapitations since 1992.

Last week George Osborne showed that he had learnt nothing, by foolishly identifying the recent weakness of sterling with the alleged weakness of the British economy and the Government’s fiscal policy. In fact, the pound’s decline is not a problem but a solution. It follows naturally from the Bank of England’s aggressive rate cuts and the monetary freedom that Britain retained by staying out of the euro. This precious freedom is now reflected in the highly competitive exchange rate and ultra-low interest rates that will help to lay the foundations for recovery, just as they did in 1994-95 and 1983-84.

This week, Mr Cameron showed that he had forgotten nothing by suddenly reverting to the policies of John Major – not just the “strong sterling” totem, but the whole package, complete with empty promises of fiscal restraint, warnings about a “Labour tax bombshell” and contempt for Keynesian economics. These were policies that Mr Cameron used to advocate when he worked for Norman Lamont. The leader of the Tory “modernisers” was supposed to have forgotten all this nonsense when he left the side of the former Chancellor on Black Wednesday, but he has now reverted to type…

Unfortunately for the Tories, their policies are thoroughly bad economics.

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