Blind to the facts and stubbornly resistant to any change in fiscal direction, Osborne is driving us to disaster
Pity poor George Osborne. On Tuesday, the chancellor was forced to cut short his holiday in California, check out of his �1,000-a-night Beverly Hills hotel and fly back to London to address the Commons on the growing European debt crisis.
He needn't have bothered. Rather than sober, honest, evidence-based analysis, MPs were treated to a masterclass in distortion and delusion, hubris and high-handedness. Events around the world "completely vindicate" his decisions, Osborne proclaimed. The cuts, he brayed, have made Britain a "safe haven in the sovereign debt storm". According to the chancellor, the AAA-rated UK had a better record of growth than the downgraded US.
Osborne, fresh back from Hollywood, has lost touch with reality. Let's remind ourselves of the facts. Billions have been wiped off the value of FTSE 100 companies. Business and consumer confidence is plummeting. Growth has amounted to a paltry 0.2% since the spending review in October; over the same period, the US economy grew 1%.
Almost exactly a year ago, in a speech to the City, Osborne coined the phrase "deficit deniers" to smear anyone who dared question his monomaniacal obsession with austerity. It is he who is now in denial: Osborne is the see-no-evil, hear-no-evil chancellor. In March, he even had the temerity to deliver a "budget for growth" in which he downgraded the forecast for growth.
Lest we forget, the Office for Budget Responsibility has downgraded its growth forecasts for the UK three times. The Bank of England has downgraded its own forecasts five times since Osborne arrived at the Treasury ? on Wednesday, it cut its growth forecast for 2011 from 1.8% to just 1.4%. Yet the chancellor's flunkies continue to brief that Britain's prized AAA credit rating is safe. It isn't. Rating agencies are fickle: in March, Moody's warned the UK could be downgraded if growth continued to stagnate ? as, of course, it has.
For Osborne, ever the schoolboy in the political playground, attack is the best form of defence. On Monday, in a newspaper article written from his LA bolthole, he claimed that "the alternative of more spending and yet more borrowing is now frankly ludicrous and places those who advocate it on the outer fringes of the international debate". Really? Is Nouriel Roubini, the eminent economist who predicted the crash, a "fringe" figure? Roubini says the best way to avoid another recession is "for those countries that have not lost market access ? to introduce new short-term fiscal stimulus while committing to medium-term fiscal austerity".
What about Jonathan Portes, who was chief economist at the Cabinet Office until this year and is now director of the National Institute for Economic and Social Research? "The UK economy is weak," Portes said earlier this month. "The sensible thing to do now ? would be a modest loosening of fiscal policy."
Even Osborne'sown allies are deserting him. On Thursday the Telegraph's Jeremy Warner, a long-standing deficit hawk, admitted that "those of us who have been calling the top of the bull market in bonds for the best part of the last two years are left with egg on our faces". In May, the chief economist of the Organisation for Economic Co-operation and Development ? often cited by Osborne in support of his austerity measures ? warned that the chancellor may have to slow the pace of his cuts if growth stayed weak. And the IMF has said he will struggle to meet his 2015 target for deficit reduction.
Osborne is growing increasingly isolated. He may not be a deficit denier, but he is a growth denier. Blind to the data and stubbornly resistant to a much-needed change in fiscal direction, he is driving the British economy off a cliff.
New Orleans Andy Flower Ireland bailout Environmental sustainability Nick Barmby Human rights
No comments:
Post a Comment