Recession 'red alert': PM seeks to scare us into voting Tory

David Cameron’s “red light” warning about the global economy is being seen as part of a Tory general election strategy to make voters very, very afraid that the Two Eds - Balls and Miliband - would wreck the fragile UK recovery.

Writing for The Guardian, Cameron raised the spectre of recession in lurid terms, saying “red warning lights are flashing on the dashboard of the global economy” and a second global crash could be looming.

It was designed to give better-off Guardian readers nightmares about bogeyman Ed Balls, the shadow chancellor, and his geeky master, Ed Miliband, targeting the comfortably-off with their dreaded Mansion Tax, and upsetting the applecart in their bid to raise living standards across the board.

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Journalists accompanying the PM on his trip to Australia for the G20 were in no doubt. Guardian political editor Patrick Wintour writes: “Politically, Conservatives believe an emphasis on the risks still facing the UK will make anxious voters recoil from handing stewardship of a fragile economy to a relatively untried Labour team.”

Cameron gives the game away in the final paragraph of his article: “In six months’ time, Britain will face a choice: the long-term plan that has seen it prosper, or the easy answers that would surely have seen it fail…”

Wintour points out some recent polling has seen the economy decline as an issue for voters, partly because there is a belief that the recovery is secured, leading to issues such as the health service and living standards - which have been seized upon by Labour - to rise in importance.

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George Osborne, the Chancellor, is now expected to use the Autumn Statement on 3 December to give another scary forecast of what would happen in Britain if Labour were to win power and Ed Balls implemented Plan B - higher taxes, higher spending, a widening deficit.

Nick Robinson, the BBC’s political editor, told Radio 4’s Today programme that Cameron was trying to get the political issue off immigration - Ukip’s strong suit - and back onto the economy.

“He is doing what he calls ‘pitch rolling’ - preparing for the big match that is the Autumn Statement where the Chancellor may have to explain some bad data showing borrowing, far from doing down, is going up again.”

Robinson predicted that instead of offering pre-Christmas “handouts”, Osborne will be announcing “takeaways” with the threat of more austerity ahead.

There is alarming evidence that whoever wins the next election, there is worse to come.

In 2010, Osborne forecast the deficit would be down to £37.5 billion by now. But he will have to tell Parliament that a fall in tax receipts - due in part to the falling price of oil, and to the general lack of wage rises - means the deficit is growing and nearer £100 billion.

The Institute for Fiscal Studies said last week that public spending cuts will be needed post-2015 at least as big as those in the 2010-2015 Parliament, possibly as high as £50 billion.

Against that background, Cameron’s Tory conference speech promising £7.5bn in tax cuts for middle income earners looks positively reckless.

As Robinson pointed out, Cameron’s “red light” warning echoes the thoughts of Mark Carney, Governor of the Bank of England, who has raised the spectre of recession, disappointing growth and falling growth in the eurozone, Britain’s vital export market.

The latest inflation figures are out tomorrow and The Independent says Carney may have to write his first letter to the Chancellor explaining why they are higher than the two per cent target.

Cameron’s problem is that most voters don’t seem to have been experiencing the recovery in the first place. Even ex-PM John Major says so. He told the Andrew Marr Show yesterday: "We still have people concerned and worried – none of the growth in the economy has yet reached wage packets or salary slips.”

Which allowed Chris Leslie, shadow chief secretary to the Treasury, to respond: “David Cameron claims his policies are working, but as even Sir John Major admits, most people still aren’t feeling the recovery.”

Today, a group of academics from the LSE and the Institute for Social and Economic Research at the University of Essex are due to publish a report showing that the rich have got richer and the poor have got poorer under the coalition government. Two-earner households and those with elderly members have gained most while lone-parents have done worst.

It helps explain why Labour has extended its poll lead to four points in a ComRes poll for theSunday Mirror poll released yesterday, even though only one in five people say they can imagine Ed Miliband as prime minister.