The central political argument has been whether the decision to pursue a reduction in the deficit has contributed to slowing growth. Labour opportunistically claims it has but Osborne is able to point to countries like Greece and Italy as evidence of what happens when governments duck difficult decisions.
Pursuing a credible plan to reduce the deficit means the markets have invested in UK Treasury bonds, regarding them as a safe haven, so the real interest rates on British debt have fallen to historic lows. This means the UK will be spending some £20bn a year less on interest charges than it otherwise would have done and that has created some scope for new investment.
Osborne had two key tasks. Firstly, to demonstrate that he understood the pressure people are feeling on their own household budgets, so announcements to hold down fuel duty, cap rail fares and offer more free childcare places have been important. Secondly, he needed to show that, while sticking to his deficit reduction plan, he is also redoubling efforts to get the country moving again and is responding to the fresh challenges to growth. That meant policies to accelerate investment in infrastructure, boost lending to small businesses, create tax incentives for those who invest money in start-ups and give heavy industries and major employers a respite from green taxes. It was all there.
Since being elected, Ed Miliband has had a consistent message arguing against deficit reduction but it has been the wrong message and has driven his credibility to new lows. In the past year, the polls have shown a consistent and sharp decline in his personal ratings. The public knows difficult decisions have to be made and it does not trust Miliband to make them.
George Eustice is Conservative MP for Camborne and Redruth and a former press secretary to David Cameron
