It's about politics, not economics

Tweet Later today, the Chancellor will make his autumn statement.  There’s plenty of speculation about what will be in it, along with a great deal of pre-announcing as the government tries to maximise the impact of the good news bits.  There seems little doubt that his message will be, in essence, that the current account deficit has not gone down as planned, but that there’s money available for some gimmicky giveaways and re-announcements.

He will, of course, blame factors beyond his control for the first part, and claim all the credit for the second.  (Whilst his coalition partners will claim that the second is all down to their moderating influence)

The real announcement is the one that he won’t make, which is that he’s known all along that current account deficit reduction is not as important as he told us it was.  In fact, it hardly matters at all.

In that sense, the Tories have pulled off a political master stroke.  They’ve succeeded in persuading the media and the other parties to obsess endlessly about how to reduce the deficit, whilst they carry on running one.  They’ve used the excuse of the deficit to mount an ideologically motivated attack on the welfare state, and managed to get the main opposition parties to commit to continuing largely the same policies.  Even if they lose, they win.  And we let them.