Why aren't Labour and Tory rowing about growth?

There is something a bit surreal about a Labour manifesto whose first page is a promise to borrow and spend as little as possible, in contrast to the Tories' weekend claim that they would spend £8bn more on the health service but won't say how to finance that spending.

This counter-intuitive contrast is all about the parties' own perceptions of their respective weaknesses - that the public finances would return in short order to chaos under Labour, and that the NHS would collapse under the Tories.

There is of course a risk in Labour's promise to be hairshirted in a fiscal sense, and the Tories' pledge to splash the cash in hospitals - that Labour will reinforce the anti-austerity vote of the SNP and the Greens, and that the Tories will sacrifice their fiscal credibility and drive waverers into the arms of Ed Miliband.

Austere

But what is perhaps slightly odd about both Labour and Tories is that neither side are having an argument today about which side is best to promote growth.

Labour, if it wanted to, could make the case that although it is trying to be austere, it is less austere than the Tories - and that therefore the lesser spending cuts or lower tax increases that its fiscal rules require would be less of a brake on economic growth than Tory plans require.

Just to remind you, the Tories are committed to achieving a surplus on the overall budget, including investment, and Labour's pledge is simply for a surplus on the current budget, excluding investment.

Momentum

So if the Tories stuck to plans set out in the last budget, Labour could spend £39bn more per annum than the Tories in 2020 (more or less equivalent to the entire defence budget) and still meet the fiscal rules set out in its manifesto today.

And a good number of economists would argue that Labour's approach would not only protect funding of important public services but would also reinforce the momentum of growth in the economy.

So why isn't Labour making that case?

It is for two reasons.

First, they fear that most voters don't agree with economists that public spending delivers economic growth.

And second, the Tory approach would accelerate the reduction of the national debt as a share of national income or GDP, and Labour does not want its commitment to reduce the national debt slower than the Tories up in lights - since they know that many voters are concerned about the doubling of the national debt to a record 80% of GDP since the Crash.

Golden goose

That said, this silence on growth cuts both ways.

There is also a credible argument to be made that Labour's determination to force private equity partners and hedge funds pay more tax will damage the growth prospects of the City of London - and therefore kill off what some see as a British golden goose.

To be clear, it is what the Treasury of Gordon Brown passionately believed a decade ago.

But a Tory Party that receives millions of pounds in donations from hedge funds and investment bankers presumably feels nervous about making the case that the tax privileges of its super-rich chums in the City should be protected - even if failure to do so leads to a successful British industry being driven offshore.