David Cameron rebuked by fiscal watchdog for talking bollocks

David Cameron is under pressure to withdraw claims that public spending cuts are not to blame for the UK's economic stagnation after the Treasury's independent economic forecaster said austerity had played a major role in putting the brakes on growth. In an unprecedented move, the head of the Office for Budget Responsibility has written to the prime minister saying the government's austerity programme had knocked 1.4% off GDP in the past two years.



Robert Chote, the OBR chairman, was responding to the prime minister's "no turning back" defence of the government's economic record in a speech on Thursday. Finger-wagging, and disputing the existence of magic money trees, Pinocchio Cameron said that the OBR supported No 10's view that the lack of growth since the coalition took office was due to the eurozone crisis, a rise in oil prices and debts from the financial crisis.



Cameron said: "As the independent Office for Budget Responsibility has made clear, growth has been depressed by the financial crisis, by the problems in the eurozone and by a 60% rise in oil prices between August 2010 and April 2011. They are absolutely clear, and they are absolutely independent. They are absolutely clear that the deficit reduction plan is not responsible; in fact, quite the opposite." But Chote said OBR reports made clear that tax rises and spending cuts in a succession of coalition budgets had hit growth.


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He said: "For the avoidance of doubt, I think it is important to point out that every forecast published by the OBR since the June 2010 Budget has incorporated the widely held assumption that tax increases and spending cuts reduce economic growth in the short term." In the letter he said calculations based on widely used academic calculations that austerity has reduced economic growth by 1.4% in 2011-12.