What can Osborne say?
The Chancellor will have to trim his projections for growth for next year, probably to 1 per cent – if we’re lucky. The instability generated by the eurozone crisis and the resulting fall-off in demand on the continent will hit British exports and dent confidence here.
But the level of youth unemployment here cannot, despite what ministers claim, be blamed on the euro: it has been rising steadily since 2004, accelerating after the financial crisis. And for all that governments want to be seen announcing schemes that show they are trying to help, the reality is that more state spending and intervention is not going to solve the problem. Realistically, the growth required to get Britain out of this hole is only going to come from the private sector. To that end, Osborne is expected to announce some measures to cut red tape on business, in the hope that it will encourage them to hire. But the early indications are that he will not go much beyond generalities and pro-business rhetoric.
Aren’t there more radical measures that would help business create jobs?
Absolutely. If it really wants to give firms confidence to recruit and expand, the Government could sweep away the measures from the EU that have piled up billions in compliance costs. The Agency Workers Directive, for example, gives the same rights to temporary workers as full-time staff. The Coalition should exempt small businesses – the key to recovery – from the burden of all sorts of onerous regulation, such as the right for workers to demand flexible working, a luxury from the boom years that we can no longer afford.
Anything else?
If they wanted to be really bold, ministers could suspend the minimum wage for those under 21. As many of us know from experience, some work at that age is much better than no work, especially since it can provide opportunities not offered to those festering at home. Considering the scale of the emergency, it is time for some emergency measures. But the politics are very difficult, with a fearful public potentially interpreting any such reforms as hard-hearted.
Are there any other obstacles?
The same as always – the Lib Dems. Studying their atrocious polling numbers, Nick Clegg’s men increasingly see mileage in acting as a brake on the Conservatives. Cameron’s policy guru Steve Hilton is particularly frustrated with Lib Dem obstructionism – and with foot-dragging by Osborne’s small-c conservative Treasury. Increasingly, Tory ministers share his frustration. But Cameron is desperate not to annoy the Lib Dems, even if it means avoiding measures that would increase employment and potentially save his Government from drowning in a sea of economic troubles.
Does Labour have any suggestions?
The Opposition’s first priority is to paint the Coalition as incompetent and uncaring, so expect to hear that “lost generation” catchphrase used endlessly. Ed Balls wants to reverse the increases in VAT in order to encourage consumer spending, and with it employment. Labour also wants to spend much more on training. To pay for this, it advocates – surprise, surprise – even more borrowing.