Saturday, March 09, 2013

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.

6 comments:

Anonymous said...

Cameron says that the government has no magic money trees. Is he serious? What does he call the printing of
£360 thousand million pounds at the cost of nothing more than the paper?
He calls it quantative easing. When Robert Mugabe done it, they called it money printing.

arbroath said...

Indeed.

BoS said...

But, but, but...he ALWAYS talks bollocks!

arbroath said...

I know, BoS.

Barbwire said...

We're probably looking at slipping into a decline with the "sequester" in effect. The cuts are going to hurt our economy just when it was starting to recover.

arbroath said...

The main problem in the UK, Barbwire, is that the current government's measures have sucked all the actual cash out of the economy.

People with little tend to spend ALL of their income.

People with more than they need don't.

By pandering to the rich, giving them tax cuts, and taking money from the poor, people just don't have any spare cash to spend.

So the economy stalls.

Mind you, with a multi-millionaire by way of birth Chancellor of the Exchequer, who has a degree in modern history, and whose only previously employment has been as a towel re-folder in a store and typing the names of dead people into a computer system, it's hardly surprising the economy is in such a mess.