Osborne “absolutely not for turning”

The Chancellor of the Exchequer is “absolutely not for turning”.

He did actually say the words to me, fully conscious of their historical resonance. That was a fairly uncompromising response from George Osborne to my attempts to test the limits of his flexibility on deficit reduction in an interview he gave to me this afternoon.

Perhaps as interesting is the new tack from Number 11 on yet another disappointing GDP number was his “safe haven” strategy. The growth figure was “positive” he told me, which is factually unarguable.

But 0.2 per cent is not what he came to the Treasury to deliver. Not over 3 months. Not over 9 months. 0.2 per cent is how much the economy has grown in the three full economic quarters that this Coalition has been in power, for which the data has been released- 0.2 per cent since the Chancellor got his feet under the desk.

So no Brownian boasts about growth. Instead he constantly mentioned his role in Britain becoming a “safe haven in a storm”. The benefit of his policies can be seen in the absence of a Eurozone or US-style fiscal crisis. “Britain is stable,” he told me, referring to politics and economics. It was almost as if he was saying, we may not be growing much, but at least we are not mired in crisis.

That’s a significant downgrade in expectations. Does it mean that his policies are to blame for weak growth? Not necessarily, and you basically can’t tell yet. But as I showed last month, some 84 per cent of jobs created in the year to April were created in the first half of the year. A better question, might be: has the economic temperature in Britain cooled since August? Why not respond flexibly to these changed conditions (even setting aside whether or not their your fault)?

“I don’t think there’s been a particular change in the British economic temperature… I think world economic conditions have changed. They have been a lot more challenging in the last months. there’s been a huge increase in the oil price, which personally I think has had the biggest impact on consumer confidence both in Britain and in America,” the Chancellor told me. I put it to him that he was having to revise up his estimates for the deficit, partly as growth falters. His response: “We are on track with the public finance figures … our AAA rating has been reaffirmed under this Government”.

Another tack. Surely the recently announced collapse in UK living standards, as measured by real wages (largest drop since 1977) was not in his economic plan.

His response? That the banking crisis and recession had made Britain poorer, and this is what we’re seeing now.