David Prosser: New year resolutions for a Chancellor who still has much to prove

Outlook One might forgive George Osborne if he has not yet got round to making any resolutions for 2011: after what must surely have been the most momentous year of his life, he is due a bit of a breather. No doubt the Chancellor has some personal ambitions for the year ahead, but professionally speaking, there are plenty of possibilities too.

The most important resolution for Mr Osborne might be expressed this way: don't be afraid to admit you've made a mistake. It is too early to say yet whether the gamble the Chancellor is taking with the recovery, by pushing ahead so aggressively with deficit reduction, will pay off. But by the middle of the year, we will have a better idea of just what spending cuts and tax rises are doing to growth and unemployment. And if the recovery is undershooting the modest forecasts made by the Office of Budget Responsibility, there is no shame in changing tack. After all, the whole point of appointing an independent OBR was to provide an impartial analysis of the success – or otherwise – of fiscal policy.

That doesn't mean abandoning the effort to get borrowing under control – the idea that it is all or nothing on deficit reduction is politically expedient, but hardly realistic – but slowing the pace of retrenchment might give the economy the breathing space it needs. In the short term, the Chancellor should at least consider delaying the VAT rise that is due to take effect on Tuesday – even if it is only for a month or so. The retail sector had been expecting a bumper run-up to Christmas, with consumers rushing to beat the VAT increase. The weather put paid to that idea. And while the earlyevidence from the sales is that the tills are now finally ringing, the high street deserves a chance to recover from December's big freeze.