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Whatever The Guardian may say, Osborne's deficit strategy isn't exceptional, it's very average

By Tim Montgomerie
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Last week The Guardian accused George Osborne of being "a lonely figure" on the world economic stage. "One by one," said the newspaper, "his allies – whether in the CBI, the G20 or the OECD – are distancing themselves from his policies."

Hoban-Mark-150p In a letter to today's Guardian Mark Hoban MP, Treasury minister, hits back:

"Your editorial (A lonely figure, 27 May) asserted that the CBI, the G20 and the OECD were "distancing themselves" from the government's deficit reduction strategy. Would this be the same CBI whose director general said earlier this month that "we are rock solid behind the chancellor's plans to eliminate the structural deficit within a parliament" (John Cridland, Financial Times, 9 May 2011)? Would this be the same G20 whose latest communique on deficit reduction reaffirmed the Toronto commitment which stated that "those countries with serious fiscal challenges need to accelerate the pace of consolidation"? And would this be the same OECD whose secretary general told Sky News last week that "no way was there any signal of a change in course. We are continuing to be supportive" (Angel Gurria, Sky News, 26 May 2011)?"

Game, set and match to Mr Hoban methinks.

The truth is that George Osborne is not "The Slasher" as The Mirror has nicknamed him. In yesterday's Sunday Telegraph I set out some of the facts:

"Although many people will be hurt by the next four years of austerity, it’s ridiculous to argue that George Osborne is a bloodthirsty surgeon. Over the past 12 months he’s actually presided over higher spending. Today, the Cameron state is 3% larger than the Brown state. Once the cuts start they’ll be smaller than the European average*. Barack Obama, a Left-winger who is loved by the Labour Party, proposes to cut faster and further than Britain. Osborne may say that Labour maxed out the nation’s credit card, but he won’t stop using it until the very end of this parliament. There was £910 billion of public sector debt at the end of Labour’s years, but there’ll be £1,300  billion by 2014-15. To service that debt, £62 billion of taxes will have to be taken from British business. That’s £13 billion more than today. In every contest with their rivals from India and China, British businesses start with a ball and chain shackled to their ankles."

The primary weakness of the Osborne plan is not on the fiscal front (which is getting all of the attention of The Guardian, Labour Party and BBC) but on the supply-side front. There's the cost of the renewables energy policy for UK manufacturing. The sinking of huge sums into hi-speed rail when industry most needs more motorway and airport capacity. Extra red tape including the Equality Law and the £2.5 billion cost of new paternity laws. Add in EU regulation of the City, retention of the 50p tax band and the failure to modernise trade union laws and you can understand why experts are downgrading growth forecasts.


* This claim produced a fight among the factcheckers but FullFact awarded it 4/5 for accuracy.


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