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A triple boost for George Osborne

OSBORNE-ST-STEPHENS A busy Wednesday meant ConHome didn't do justice to George Osborne's Mais lecture. Patience Wheatcroft has done justice to an important speech in today's edition of the Wall Street Journal Europe. 'Give George Osborne a second chance', she wrote, to a sometimes sceptical City:

  • Budgetary transparency: "From monetary and fiscal policy, through banking regulation to public spending, Mr. Osborne laid out a coherent strategy for the financial stability that markets crave. At its core is the formation of an Office for Budget Responsibility, to be headed by the respected economist Sir Alan Budd. It would be charged with producing a truly transparent national balance sheet, one not flattered by financial engineering or the delusion that pension commitments can be ignored. It will not make for comfortable reading."
  • Political wisdom: "While economists have been differing as to whether the cuts should come this year or next, he is adamant that an early start must be made. His party is under pressure, from its supporters as well as its opponents, to detail what those cuts would be. Sensibly, it is resisting. The reach of the public sector has become so great in Britain that, in large parts of the country, a majority of voters are employed by it or survive on its handouts. It isn't cynical, merely sensible, to try and avoid alienating too many voters ahead of an election by detailing where the axe must fall. What is crucial is to have the plan that will bring it down sharply and rapidly if the election is won, even in the face of strikes and demonstrations, such as those seen in Greece and Spain."
  • Financial regulation: "Mr. Osborne has also been criticized over his plans for reshaping financial regulation in the U.K., but, in his Wednesday evening lecture, he made a strong case for his reforms, which return the central bank at the heart of the country's macro and micro-prudential supervision. The failings in the existing system couldn't have been more graphically demonstrated than by the crisis that was allowed to erupt. The regulators shouldn't be absolved of responsibility for the disaster, but a system that took away the Bank of England's supervisory role had failure "hard-wired" into its design."
  • Banking reform: "He was equally adamant about the need for banking reform, a message echoed yesterday by Bank of England governor Mervyn King, who expressed his fear that debate over banking reform might be allowed to drag on without real change ensuing. Mr. King was clear about the dire consequences that would bring: "It won't actually prevent the next crisis, and the next crisis will be even bigger." The would-be future chancellor, Mr. Osborne would rein in the riskier activities of retail banks and push for "living wills" that would enable a relatively tidy death for financial institutions that fail."

Full WSJE article here. Full Mais speech here.

Topping off a good day in the press Mr Osborne's intellect was praised by The Guardian's Michael White and a survey of business leaders found 67% of them preferring him to Alistair Darling.

Tim Montgomerie


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