Rescue to recovery

Last Wednesday the Chancellor delivered his statement on his plans for deficit reduction for 2015/16. His message was that we need to reign in spending still further but we are on our way to recovery.

There is good evidence to support this positive outlook. The deficit is down by a third and employment is at its highest level on record. Business optimism is up. A recent survey by the CBI indicates improved growth across several UK regions. A CIPD employment survey shows a more optimistic jobs market and a BDO survey points to an improving output index for services.

In short, we appear to be moving from economic rescue to recovery.

This leaves Labour in a tricky place. Their insistent predictions of endless economic trauma are starting to ring a trifle thin and with the General Election just two years away they have now to adjust to this new economic reality at the same time as staking out clear positions in the key policy areas.

On the matter of adjusting to our improving economic circumstances they have dramatically shifted ground with Ed Miliband announcing that Labour will now broadly follow the government's post-election spending plans. This shift will in itself cause tensions within the party and with their union sponsors.

On the issue of policy positioning, gone now is the luxury of being able to oppose without proffering an alternative — Labour voted, for example, against every welfare reform the Government has put through parliament, including against an overall family cap on welfare benefits of £26,000. They will now have to tell us where they will cut and who they will tax. And, as they will increasingly discover, taking a responsible position on borrowing when times are tight quickly gets you into the business of upsetting people.