Not quite a 'Sputnik moment' but a wake-up call for the government| Michael White
Given yesterday's shocking growth figures, David Cameron and George Osborne really should ponder revising their austerity strategy
If it wasn't so serious it would be funny. The coalition withdraws vital state support underpinning a fragile UK economy in a thousand ways. So far as I can tell, it does so with absolute sincerity, convinced that only its cuts programme will take Britain "back from the brink".
The economy predictably slides towards the brink in consequence and ministers are shocked. Not quite Britain's "Sputnik moment" of truth, as President Obama put it in the US context during his state of the union speech last night. But a nasty moment all the same.
Blame the weather! It's the wrong kind of snow! There's some truth in that, but not enough. David Cameron will have to work harder, read fewer bedtime stories to the kids and think about Plan B. He can't rely on Andy Murray to cheer us up by winning the Australian Open.
Why? Because too much money is being withdrawn from the economy too quickly, just as ministers were warned. Small businesses can't get the loans they need or would like if they had more confidence and ministers, so the CBI's saintly Richard Lambert said this week aren't doing enough to stimulate growth.
What's more we are in trouble before the full impact of the cuts is felt. Talk of double-dip recession is premature: the economy should bounce back: keep an eye on the weather forecast! But the lethal combination of low growth and nagging inflation, 70s-style, is a more likely scenario now that Mervyn King is correctly resisting an early interest rate rise.
As I type former chancel! lor, Nor man Lamont, is struggling on Radio 4 to make sense of it all. The past year's recovery was quite strong until yesterday's announcement that the economy contracted by 0.5% in the fourth quarter of 2010, he is saying.
No disputing that, Norman. It will be a choppy recovery, he explains, echoing King, the governor of the Bank of England, who lashed himself to the cuts mast in a speech in Newcastle last night.
But Britain must de-leverage reduce the illusory debts, personal and corporate, which sustained Labour's decade adds Lord Lamont, a former Rothschild investment banker and thus part of the culture that triggered the 2007-9 financial collapse or de-leverage as he might put it.
Lamont looks to the mighty US economy to motor global recovery as it did in his salad days but admits it's spluttering ("If you think we have a housing problem ") and manages not to mention surging China once.
Meanwhile, fellow rightwingers on the Tory benches are already calling for faster deregulation and lower taxes to stimulate the private sector. It is precisely the remedy that has helped bring the US economy down in the post-Reagan era of unfunded tax cuts and growing market fundamentalism, which depresses mainstream wages, marginalises organised labour and leaves mile upon mile of homes bought on reckless mortgage loans to rot.
America faces its Sputnik moment, says the president. For anyone old enough to remember the "bleep, bleep, bleep" of the first Soviet spaceship in orbit the planet's first escape from its home base October 4 1957 it is a striking analogy. It was the wake-up call.
The US got its act together, beat the USSR to the moon in 1968 and finally faced it into self-destruction after 1989. China's "market Stalinist" model will be a much much tougher challenge.
Back here in little old Britain, as everyone ! knows, t he banks needed help in their sharp de-leverage and the taxpayer rightly stepped into the breach. But the party had to be paid for and George Osborne repeatedly told his party conference that "we are all in this together".
Sorry, cynics, but I don't doubt he meant that too. Naivety and inexperience, too much book-learning and not enough real life, leads young politicians and their hope-over-experience voters to make avoidable mistakes. Remember Tony Blair?
Let's hope Ed Balls the luckiest man in politics to get the shadow chancellorship just before a crash, so Larry Elliott writes today reins himself in and does not overdo the schadenfreude as he lambasts the coalition. Voters will not like it and Osborne will have plenty of Balls-bashing ammo in his own locker.
Osborne has to do a turn at Davos on Friday, a town whose annual visitors from the global industrial elite should applaud his austerity. But Davos likes success more than consistency, so he will not get much sympathy.
Then on to the budget, on to the May elections, on to the cuts taking their toll. It will be an even tougher 2011 than ministers feared. They shouldn't panic, it's rarely wise, but they should ponder revising their austere strategy, adapting to reality-outside-Downing Street. We will soon learn what they're made of.
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