Was George Osborne right to raise the prospect of a collapse of sterling?

There has been much criticism in the media of George Osborne's response to the economic crisis over the past couple of weeks.

The consensus has been that not only are the measures the party is proposing too timid, but that David Cameron and George Osborne have not been forthright enough in their criticism of the Government.

The leader in today's Daily Telegraph repeats that allegation, but then that was written before this morning's Times hit the newstands, in which the Shadow Chancellor delivers what is already being written up as his fiercest attack yet on the Government.

He lays the blame for the country's current economic position clearly at the door of Gordon Brown and then steps into controversial territory.

"We are in danger, if the Government is not careful, of having a proper sterling collapse," he says, breaching the convention that shadow chancellors do not predict runs on the pound.

Will this robust move silence his critics? Or will he now be accused of going too far?

Jonathan Isaby

Comments

[Peter]

All very well but it's a bit late to be joining the fun isn't it?

Politically he is a minnow and the lack of a heavyweight economist could lose the election for the tories. But since they not offering any significant reform, who gives a toss?

[David Cooper]

It already has collapsed, George. Look at the £-$ exchange rate and how quickly sterling has already fallen. Now, the real task is going to be that of banging it home how this will affect the ordinary voter in practice. The drop in their spending power abroad and the increased cost of their foreign holidays will be a good starting point.

[Damon]

He's perfectly right to point out the consequences if the government persists with irresponsiby borrowing and even printing money.

I'd rather it was convention that fiscal discipline was maintained.

[Iain]

I don't see anything wrong with that, after all politicians speak on interest rates and that can dictate currency movement. I should think this is a convention from way back when currency rates were fixed, and Government economic policy was dictated by the rate of exchange.

[John Scott]

Making predictions like this is alarmist and no-one believes Osborne has the expertise to make judgements about currency movements anyway (he is not George Soros).

Secondly, we seem to be pursuing a policy of chasing headlines to restore Osborne's battered credibility rather than pursuing an alternative economic strategy.

Osborne is also losing his populist edge with middle england. Where is the pre-emptive call for a cut in basic rate income tax or VAT to help families through the downturn? He could fund it by reallocating the £3bn pledged to reduce inheritance tax which, with falling asset prices, is no longer such an issue.

It seems from the article that we are setting ourselves up to oppose a fiscal stimulus in the Pre-Budget Report (i.e. up to £15bn tax cuts) because it offends our hitherto unarticulated principles on public borrowing.

The PBR is in ten days. We need to do better than this, particularly when the G20 conference this weekend is likely to produce a blueprint for global tax cuts to stimulate the world economy.

[Malcolm Dunn]

Yes he was right.Sterling's fall has been most surprisingly ignored by most commentators until yesterday. I can't understand why because it has severe implications for our economy. Clearly the money markets believe the crisis will be worse in Britain than the US or the Eurozone and with Brown & Darling ready to borrow ludicrous amounts of money who can blame them?
However George's attacks would have far more potency if he was suggesting alternatives and it is this rather than his failure to attack hard enough that has done him damage.
Labour's reaction that his comments are 'irresponsible' given sterling's 30% fall against the dollar are beyond parody.

[Mark Hudson]

It's extremely hard to find anyone in the City now who takes him seriously. People on here may not agree with my view that he has always been materially out of his depth on economic matters, but the Yachtgate scandal rather sealed it. It's a shame as he is clearly highly intelligent. I suppose it's the lack of a real world job that's the issue.

Anyway, on to today's remarks: not smart, not smart at all. Currency markets like such pronouncements like a hole in the head.

When will the Conservative Party realise that - at the moment and for the forseeable future - people want reassurance and stability? The time for blaming people and post mortem analysis comes later.

[sjm]

It seems to me that professional commentators such as Mr Isaby want Cameron and Osborne to do the opposite of WHATEVER it is they do.

If they attack, they shouldn't.

If they don't attack, they should.

Most of us recognise that the Government should slash spending - if Osborne or Cameron say that, they know that millions of votes will be lost from those who will be affected. If they don't say it, those who would like to see sweeping cutback measures may not vote.

The phrase 'rock and a hard place' come to mind.

[sjm]

And having just read Mark Hudson's comment about people wanting reassurance and stability - yeah, let's all bury our heads once more in a pink fluffy cloud and pretend mom's around, cooking us apple pie.

We've been lied to for years, it's time 'people' woke up to reality, things are grim, and they are going to get grimmer.

[Sam R]

Of course he was right, if a bit slow, in highlighting the nosedive - against the dollar by 25%; the Euro by at least 20%.
Now, to light the touchpaper.
Concerning Our George's far from brilliant performance throughout this crisis, perhaps now is the time to take the advice of Lord Kalms (DT, today) and bring back David Davis.

[Henry Mayhew - Ukipper]

A good hard attack. Quite right. He can turn his reputation around if he focuses on giving Gordon Brown both barrels. Go for it.

I hope he has another think about NI Contributions to make his proposal bigger and less complex. Putting companies out of business and employees on the dole queue through non-profit based tax is not going to save the taxpayers money or help us get out of recession.

I am beginning to think we need government intervention to boost manufacturing and exports to take advantage of the low pound. Mandy is doing a very good job in this area. Conservatives could make it a priority. Services cannot employ everyone in this country so we have to get back into making things and selling them around the world.

[Iain]

"Anyway, on to today's remarks: not smart, not smart at all. Currency markets like such pronouncements like a hole in the head."

Mark Hudson I think we both share an equally low opinion of Osborne's ability as Shadow Chancellor , but in this instance I don't think any utterance by Osborne will have a h’apeth of difference to how the currency markets will value sterling. But in pointing out the precipitous decline we already have had in sterling, and the potential risks starlings faces with Brown’s borrowing plans is a reasonable thing to do, and if nothing else it will strip the spin and praise Labour and its acolytes, like the BBC , are heaping on Brown, for while they are all back slapping Brown telling him what a wonderful world leader he is, world financial investors have taken a very different view, and seem to have no confidence in Brown as shown in how they have flogged off sterling, and ( according to a Mellon report) have been removing their investments from the UK as fast as they possibly can.

[Roberts]

Sadly the Conservative response to the global crisis has been neither visionary nor competent. The policy area which was once regarded as Conservative strength is clearly not so any longer. Now, for Osborne to fuel a run on the pound shows a complete lack of judgement and commonsense.

[m wood]

It was certainly right to draw attention to the Elephant in the Room! devaluation has been going on for months and no one liked to talk about it. The BOE was obviously worried and had to be bullied into slashing interest rates.
Brown sees this as an easier way of disguising the full extent of the financial mess he has created by allowing state and personal debt to get out of control. How long before we are told that "The Pound in Your Pocket is....."?
Labour Governments aways end up by devaluing the Pound.

[Walaa]

To answer your question nothing will silence the critics. It seems behind the scenes somewhere a decision that 'he can not do the job' has been made, and someone wants him out !!! He can only ride this wave if he 'pretends' it is not happening, but if he caves then he is out, and they won.

He was right to warn us about the sterling collapsing, just yesterday $100 = £65.50 while in early October $100 = £49.50. I would be worried if he didn't. By warning us he showed that he is capable of reading and predicting economic signs and trends. That alone puts him in a position of trust, especially since the Chancellor is acting as if this economic crisis will go away if he throws enough money at it.

[strapworld]

I despair. When the government are, rightly, in the brown stuff over Baby P. Whilst editorials, front pages still full of the sad awful story.

What does Osborne do? He hands the Labour crowd a lifeline. He has broken the convention is the mantra on all the news channels...So it AGAIN the wicked, stupid Tories.

Give us a break. If Cameron cannot see the strategic blackhole, which is Osborne, then he needs to consider his position.

Osborne, if he is not sacked, will prove to be the man who snatched defeat from the jaws of victory.

I despair!

[Mike]

The City has already spoken, it won't take any of the King's schilling in more assistance and it has passed judgement on Brown's economy in terms of our currency.

A lower pound can import inflation but I feel it will curtail imports on price senstivities, raw materials prices are in collapse and it will encourage domestic production. It's a benign fall in Sterling I think.

However, it will close of one avenue to Brown & Darling. Brown & Darling will be very reticent to go the money markets for unfunded tax cuts.

That's the gig why Brown is pleading for international action on tax cuts - he knows he can't do it unilaterally by borrowing money.

In exactly the same way Healey was punting rates to 15% in the 70s to sell government gilts, Brown and Darling have no room for manoeuvre.

If they trigger a run on Sterling with their borrowing plans - they are finished. International condemnation that they cannot spin out of.

We are heading into a scenario where Brown & Darling to fund their tax cuts will have to cut government spending.

Healey had to freeze public sector pay and make cuts, Brown & Darling have to do the same.

And we all know what happened in Winter '79.

Believe me, Brown & Darling are finished, any talk of election is just fanciful deluded twaddle from a government well past its sell by.

[Edward Huxley]

In politics you need good luck and good judgment. Two things Mr. Osborne has lacked. I do not doubt his intelligence and where he was educated doesn`t worry me, but those two things, plus his youth for such an important job mean he should go.

Labour have a couple of juveniles - the bros. Miliband and they also carry little weight, but that`s their problem. If the Tories want to win the next election they need somebody mature to take on this important job.

[GB£.com - A Ron not a Roon]

"Where is the anger?" asks George.

Completely valid. Absolutely right. But it completely loses its resonance when delivered by the man who was cosily laughing and joking with Mandy this week.

Labour are destroying Britain but don't let that get in the way of lunching with them and presenting them awards.

Now is not time for NL anecdotes, but antidotes for the NL poison that is killing the UK.

George articulates the people's anger in that article very well but it would be hard to believe he shares the pain or anger he describes.

Please, move George to Chairman, get in a solid, experienced Shadow Chancellor who the public can believe is genuinely angry and ready to tear Labour to strips.

[Raj]

But it completely loses its resonance when delivered by the man who was cosily laughing and joking with Mandy this week.

Oh for God's sake, your blind hatred has gone too far. You know full well that both were surprised by the meeting - what were they supposed to do, frown at each other or start a punch-up like two football louts?!

Well done for George drawing attention to this matter. As has been said the pound's drop has mostly been ignored - it matters a great deal.

[Man in a Shed]

He's right. A little behind the curve, but better late than never.

The public understand the impact of a change in exchange rate being a judgement on the economy.

It is the ideal counter to the lies and spin that Labour are issuing right now about the UK being best placed with low debt for the 'downturn' aka recession.

Its the proof that the government is failing. Labour spin merchants will counter with talking down the economy jibes - but that's what Darling and Brown have been doing for three months now.

Lets have more cut and thrust like this George.

[Norm Brainer]

GB£.com... your posts are starting to become indistinguishable than the obvious trolls in the comments above you, or other labourites that will try to beat him down whatever because of his upbringing.

What would you have thought of him if he was bearing a grudge to mandy at the awards - that would get reported as tensions and give the media something to talk about for weeks and make him look like he's the type to hold grudges again, like half the labour party who have it in for anyone who hasn't been brought up in a slum.

He was right to mention this as, yes, we were all thinking it, but it did seemingly go past un-noticed in the media, so responsible of him to make sure they did notice.

[Vincent Wall]

A politician should never talk down his country's currency.

Never, ever.

[Roberts]

Get rid of Osborne ! Bring in a mature figure ! Who will you have ? John Redwood or Ken Clarke ? Isn't that the basic Tory dilemma ? Which way for the Tory party >

[Tony Makara]

Mr Osborne is absolutely right to draw attention to this. Anyone who has savings in Sterling is watching the value of their money depreciate by the day. What's more EVERYTIME INTEREST RATES ARE CUT IT WEAKENS THE PURCHASING POWER OF THE POUND, remeber that 40% of our food is imported, this has to be understood by eveyone in the country. So its not just a case of reckless borrowing by Labour. We need to emerge from the recession with a stable currency and stable prices.

[David_at_Home]

Right yes but about 3 years too late!

[christina Speight]

Of course he's right to tell people the truth! That'\sa what we want from politicians and rarely get.

We're in a dreadful mess which is likely to get worse and will certainly get worse if Brown is allowed to borrow to cut taxes. The pound will disappear out of sight and with it the value of everyone's savings as Brown will not be ABLE to borrow.

Osborne is right to say that the public distrust ‘borrowing to cut taxes’. The polls have said so. But his mantra about properly funded tax cuts will not work unless it is married to a proper cut in expenditure of a major nasture. Tinkering will not do and I repeatedly point to two big programmes which would save billions. (NHS centralised computer system and ID cards). Everybody can produce alternatives but unless they can be implemented without legislation and speedily - forget them. Economists suggest that minimum tax cuts of £20 bn would be necessary to be effective.

So the crux of the matter in judging Tory policies is will they grasp the nettle of expenditure cuts ?

See also "The Tories should be as angry as the rest of us" today's Telegraph leader on
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/11/15/dl1501.xml

[David]

It has to be said he is inept

[Margaret Young]

Mark Hudson is absolutely correct. Gideon Osborne is inept and doesn't carry any gravitas in this role. The saying 'being promoted to their own level of incompetence' comes to mind.

[Tony Makara]

This is an issue in which Labour are not only exposed as vulnerable but one in which they are cornered and can't change track. We must make the Sterling crisis the issue of the day, get all our MPs talking about it, get the message home to the public that their money is worth less each day. The Sterling crisis blows the lid of Labour's claim to be economic masters of the realm, and is an opportunity for the Conservative party to portray itself as the voice of fiscal stability and sanity.

[Matt Wright]

Sterling has been nosediving for the last week so he is only spelling out the facts. The UK is sadly not well equipped to deal with the recession because Brown has borrowed too much already and our business structure is unbalanced. The value of sterling is based on the confidence of the rest of the world in our economy so the nosedive speaks for itself. If Brown has actually been prudent and not spurred on a boom with excessive spending and borrowing, then we could have ridden out the storm much better. Brown keeps quoting other countries that are having a fiscal stimulus but they have money in the coffers to do this, we don't. The party needs to be ramming this home so better solutions can be developed and the public better informed. They are not kids and deserve respect. Meanwhile Brown is jetting round the world living out his only little delusion that none of this is true and he can save the planet. He looks completely ridiculous. He is doing this because he and the Labour party spin doctors are absolutely desperate to create a narrative that this is all global, that the UK could have done nothing about it and that Brown is a world leader of immense importance. The fact that this is all rubbish is sensed by the public but needs revealing in a more robust way.

[resident leftie]

I am very happy with the current level of the pound. It's historically overvalued, and now is hitting a decent level for exporters and British manufacturers and food producers. Much lower wouldn't be so good. The BoE does not fear inflation, so we needn't worry about the inflationary pressure of imported goods.

As for Osborne, there were two possible consequences of his pronouncements. One, no one would take any notice of him because he is a useless lightweight, in which case there was no point in him saying it. Two, everyone takes him seriously as a economic heavyweight and he damages the pound, in which case he shouldn't have said it.

He will have to be pretty incompetent for me to change my view that removing him will be more electorally damaging than keeping him, but he's headed that way.

[Hawkeye]

Vincent said: "A politician should never talk down his country's currency."

What should he do then? Say absolutely nothing? Stand in silence and make no protest as the pound tanks at an APR of nearly 50%?

Someone HAS to speak out. This is the start of the next phase of the maelstrom....

[narcissa]

I like George Osborne and one day he will make an excellent Chancellor. But in the present circumstances his inexperience is a massive disadvantage, and, though charming and intelligent, he lacks authority. By contrast, every time Ken Clarke appears on TV it is obvious that he would make a formidable Chancellor and would terrify his opponents. Not only does he have the rhetorical skills required, he actually knows how money works in the real world and has experience of managing a successful recovery. Despite being a millionaire, he has the enviable faculty of appearing to be in touch with the concerns of the rest of us. He is one of the few Tories that the average voter actually likes. We have to put aside our misgivings as to his Europhilia; he has shown himself to be loyal to David Cameron's leadership and deserves the benefit of the doubt.

[david1]

At this rate Osborne will cause a run on the ToriesToby Helm in Washington guardian.co.uk, Saturday November 15 2008 11.03 GMT Article historyMuch interest - and not a little joy - among the prime minister's inner circle here in Washington about George Osborne's dire warning of a run on the pound if Brown presses ahead with yet more borrowing.

People travelling with the PM could hardly wait for Brown to emerge from dinner last night with George Bush to inform him. Officials said they were astonished that a shadow chancellor could have talked of a run on the pound in such a way, almost inviting it to happen.

Could it be the end of Osborne, everyone was asking ? "God, I hope not," said one of Brown's close associates, willing him to stay on until the next election.

[Wearside Tory]

George goes from attacking the government with his pee-shooter and conkers to a rash and bizarre statement like this....

What has happened to the common sense approach and the empathy with the hard pressed families....

Are they going to be worried about the pound vs dollar or their mortgage payments, potential unemployment and the cost of living...

Osborne's political antenna seems to have gone haywire - I am going to shut up as all I have to say is negative about the man...

[gezmond007]

Like being Being savaged by a dead sheep comes to mind

Sorry geroge too little to late. His credability has gone , I doubt gordon will be very worried !

[GB£.com - A Ron not a Roon]

Give it a rest Norm, I'm not in the slightest bit interested in whether someone is born rich or poor and completely agree with Cameron that it is about where you are going, not where you are from.

What I am interested in is whether a person is up to the role they have been given, and I can see no reason that Osborne is Shadow Chancellor other than it is considered the number 2 role, and Cameron has awarded Osborne that role for his excellent work in Cameron's leadership campaign.

Osborne is simply not good enough for this specific role.

The qualification for role of Shadow Chancellor should relate directly to experience in a similar field (either inside or outside politics) imho, not because you helped your mate become leader.

The longer he stays in the role, the more difficult it will be for Cameron to achieve a workable majority.

"that would get reported as tensions
Well yes. That is what anger is all about. I want a Shadow Chancellor who is not just experienced but also spitting with rage at the damage Labour is doing to the UK.

You know, someone who is genuinely fighting out of passion, not career progression.

[The Bishop Swine]

The question was "Was George Osborne right to raise the prospect of a collapse of sterling?"

The Answer is YES he was absolutely right and it’s about time he started to fight Brown at every opportunity. There is a real danger of our currency falling into a pit. The Government is seemingly back peddling on talk of a massive Keynesian spending splurge. Its for the very good reason that the markets are rightly concerned about all of the extra monies this government is already committed to printing. In the short run the weakness of the pound should be a springboard for our export industry.
Sadly the manufacturing base of this nation has been badly eroded the consequence of the
recession of the early 1980’s, so we can longer relay on it to pull the nation out of the doldrums. So far there has been little talk of the "Sterling crisis" but if it continues to fall we could be in real trouble. So why are we suffering so badly whilst the Doller is gaining strength with each passing day? On the surface the US economy is in even worse shape than ours with a truly horrendous deficit.
I recall that we had similar problems in the 60’s and 70’s with every move of the Labour government taken as confirmation of systemic weakness by the markets. Ironically it is the recoveries of the 80’s and early 90’s that is now our Achilles heal. No other major economy is so reliant on the financial and service industries for the bulk of its employment. Britain is caught between a rock and a hard place with a recession of epic proportions a real possibility. The easy answer of borrowing to fund tax cuts is neither wise nor possible. Our Oil bonanza is running out, so that can longer be relied upon to bail us out. The fact is we need to rebuild our economy with manufacturing and export being emphasized. This will take a long time to achieve. In the meantime George must take the fight to this government. It will not be a popular thing to say but the fact is we cannot afford tax cuts and its is monstrously irresponsible to borrow money to fund any. As a nation we will have to tighten our belts and learn how to make do and mend again. The sooner economic prudence is returned to center stage by our political class the sooner the market will start to believe in Britain plc again. If Brown will not be the voice of common sense then Osborne will have to be. So come on George we are looking to you for the voice of reason.

[The Bishops Wife]

"I want a Shadow Chancellor who is not just experienced but also spitting with rage at the damage Labour is doing to the UK."

Exactly George is just too dam nice. I want Clark or Redwood, as we need an older and wiser person at the tresury. "spitting with rage at the damage Labour is doing to the UK." Young Mark Harper would be great in a junior tresury role BTW. He has the right instincts.

[The Wilted Rose]

Osborne makes a very good point about sterling. But we are at a 'critical event' for Cameron where he has to make a tough choice.

Osborne still has a bright political future - as someone said, he's a "20 year prospect" who would be irrevocably damaged if he stays in his current post and if any blame were to be attached to him for a poor general electorion performance.

I have to say that I agree with Lord Kalms that David Davis should be appointed Shadow Chancellor, but then I was one of the first to suggest this appointment before the summer. Cameron on society (as he aptly demonstrated this week in his fury at Brown's despicable reaction to Haringey Council's culpability in the murder of baby P) and Davis on the economy and on civil liberties would

(i) slaughter Brown and Darling;

(ii) kick Lord Mandy's planned Spring 2009 election into the long grass; and

(iii) not only regain a huge Tory poll lead but also bring a landslide victory in the 2010 general election.

It's a no-brainer. A football manager wouldn't leave one of his best players on the bench - it's time to bring Davis back on the field.

[YMT]

In agreement with many sentiment in that I want to George and the party to break some balls.

[michael mcgough]

The online E.Standard is pushing an article suggesting we join the EURO if the pound crashes.
http://www.thisislondon.co.uk/standard-business/article-23586792-details/Slump+in+sterling+means+we+should+think+again+about+joining+the+euro/article.do

[Iain]

" Bring in a mature figure ! Who will you have ? John Redwood or Ken Clarke ? "

Roberts, there was an interesting exchange on Any Questions last night, where panellists were giving the audience the usual blather about the economy, which got moderate applause, then John Redwood said his piece, rubbished what had previously been said, then with passion explained what should be done, the result was that he got the loudest applause of the evening.

I don't know what the political breakdown of the audience was, but it seemed to me to be an indication people do not trust or believe any of the political parties lines , and are desperately looking around for a lead and someone to believe on the economy, regardless of any previous political prejudices they had about certain politicians. Redwood filled that role last night. So may be any political baggage Redwood might have had with the public has now gone, for the public don’t care if someone’s got two heads all they want is for someone in charge of the economy who knows what they are talking about and talks sense, for when it comes down to their jobs and family budgets nothing else matters. So may be Redwoods time has come.

[christina Speight]

michael mcgough at 12:40 So the Standard thinks that does it

Yesterday a very detailed article in the FT "What Britain’s authorities must do" By Martin Wolf"made the opposite crystal clear!!!
Those who weakly recommend joining the Euro - again - can see there that it would wreck us and since it would wreck the eurozone too they would not be so daft as to have us!

“Unclean! Unclean!” they used to call as infected people walked the streets! That's the British economy today. Too many people here still don't seem to realise how dire the position is!

There is only one way - government expenditure must be cut stringently by major changes in policy. The "let's just tweak and tinker with Labour's policies" stance is suicidal both for the party and for the country.

[Norm Brainer]

(ii) kick Lord Mandy's planned Spring 2009 election into the long grass;

Exactly... don't we want a spring 2009 election before the earth is totally scorched and our liberties erased?

[GB£.com - A Ron not a Roon]

Christina, Mick,

This was all predicted 18 months ago. The fall of EURGBP to 1.1 then the question of us joining the Euro would enter the debate.

Thankfully the Tories have been passionately arguing that retaining our currency is essential to running our country with a clear rejection of Britain adopting the Euro under any circumstances, so massive praise to Cameron and Osborne for that.*

*Unfortunately, none of that paragraph is true.

[christina Speight]

Iain at 1249 - Thank you for that account of Any Questions, which I missed. John Redwood's blog today gave me heart.

Here's a man who knows his subject inside-out and who has courage and fire in his belly.

He's a Tory who is prepared to fight and has been sidelined for too long. With him back on the front bench our morale would improve at once.

[michael m]

Yes, yes, yes

Brown has destroyed the economy, wrecked ordinary people's lives with his broken promises and dithering and now is breaking the currency.

What is left?

[michael mcgough]

Christina I agree totally.I posted that for info to be shot down not sold.

[christina Speight]

GBE at 1258. If they were predicting any move towards the euro (except for ignoramuses TALKING about it) they were talking rubbish.

Have you read Martin Wolf ? He's more reliable than a Tabloid from the Mail stable.

[GB£.com - A Ron not a Roon]

Christina,

In mid 2007 I was told the GBP would fall to 1.1 (it was 1.4 at the time) in a move towards the Euro. So in December 2007 I put on a hedge.

The prediction has been incredibly accurate.

[Simon Mallett]

The return of Redwood would be very damaging for the party. He was never popular amongst the electorate.The welsh anthem clip would be straight on and the party would look tired and dated rather than young and fresh.

I think Osborne would be great as party chairman, where he could use his political guile more effectively.

The post of chancellor needs someone with gravitas in these tumultous times. Perhaps Clarke would be right. Or perhaps Willets.

[True tory]

Osborne is dangerous and incompetent. If he's the man who is responsible for the country's finances I won't be voting tory at the next election. Sack him now.

[The bishop Swine]

Its really good to see Redwood being given the respect that he deservers.
I also see that he is being a good loyal MP and is backing Osborne. That’s of course the right thing for a man in his position to do and a sign of his political maturity. Of course there are many who feel uncomfortable with the discussions that are going on regarding George’s future. However I am very pleased to see John Redwood back in the public eye.
As he can be relied upon to tell the truth without spinning, Frankly I find it utterly ridiculous that George Osborne has be criticized for pointing out the decline of the pound. After all it is obvious to all but those who insist on stinking their heads in the sand.

[Chris Davenport]

Here we go again. As soon as we start to make progress the armchair strategists come out and start doing Labour's job for them. George Osborne has an outstanding intellect and will make an excellent Chancellor. Of course he has to tread a narrow line, not just between justified criticism of the government on one hand and not 'talking down' the economy on the other, but also between saying things that will be reported or not. Anyone who thinks that's easy is just wrong. So, if you wish the Conservative Party well, SHUT UP! If you can't say something helpful, say nothing. Your silence will be far more useful than your self-important, smart-alec whinging.

[MG]

I am not as negative as some. We are still ahead in the polls. We have a good leader. We can develop an economic position that is stronger. However I do think we need a couple of things - 1 or 2 grey beards in the Shad Cab and a bit of northern grit. Its not really balanced at the moment.

[SallyC]

Are we not falling into a Labour trap here?

GO hasn't there MIGHT be a run on the pound if the Government isn't CAREFUL.
Is that not the blindingly obvious?

[michael mcgough]

"In mid 2007 I was told the GBP would fall to 1.1 (it was 1.4 at the time) in a move towards the Euro."

The Federalists stated they would have a push in autumn 2008----they are true to their word.

[Mark Williams]

The pound has fallem from $2 to $1.45 since 1 July so the run has already happened (although a lot of that was caused by hedge funds buying dollars to make redemptions). Quite frankly, in the long run what a minister says is not going to have a long term effect on the exchange rate. Last week's pronouncements are quickly forgotten by the market although in the short term they will react quickly to ministerial comments. The markets are hardly likely to respond in the same way to comments by members of the opposition who do not have the ability to change interest rates, debt issuance, taxation or government spending.

Osborne has to be careful that he is not blamed for the fall in the pound when some real bad news (e.g. new government borrowing figures) hit the market, although the markets largely understand the government position (demonstrated in this excellent snippet http://uk.youtube.com/watch?v=7ax9ojC7AX4).

Osborne did the right thing but it was so mechanical and late tat he was obviously drafted for him by someone wiser and more knowledgeable. So let's forget about the monkey, let's hear from the organ grinder.

[Louise]

Unfortunately for some here we are playing fantasy football.

So long as Cameron is leader -

(a) Redwood will be marginalised
(b) Clarke will be marginalised
(c) Davis will remain on the backbenches.

Of the person left, Hague, there is no reason to suspect he might not be called in if Osborne falls but I see Cameron not as some nebulous, neutral figure who will chop and change at will to people touted by a website but someone with interests and agendas of his own who will make the decision only when forced to by the press, and then it will be his job that goes as well at that point.

As long as we've got that straight, saying I want Osborne to go and Davis or Redwood to come back is angels-on-a-pinhead stuff as it will never happen so long as Cameron is in charge.

As for Osborne, his interview was stating the obvious on the issue of the £, but he was wrong to say "scorched earth" was the basis of Labour's policy. First of all it assumes Labour want to lose the election, and I don't think they do (knowing them intimately and having been one of them until I defected in 2004 after intentionally sabotaging their Euro/local campaigns in Reading). Secondly it looks like he switched off his political hat for a conversational one with the interviewer - always dangerous. And third, it is nakedly party political and people don't like party political of that nature.

It may enthuse people here but it just solidifies the problem for me.

[christina Speight]

Simon Mallett at 13:16. Do listen to Any Questions VIA (not direct) http://www.bbc.co.uk/radio4/news/anyquestions.shtml
and you'/ll hear that on the crisis he was cheered to the echo while the others were merely given polite reception. Some unpopularity. People are crying out for leadership and he gave it. The fact that you can suggest Willetts says it all . HE's even wetter than Cameron-Osborne - not an ounce of fight in him.

----------------
Chris Davenport at 13:26 - Save your anger for the Labour party as the Telegraph suggests. Osborne is still shadowing Labour Policy with just a tweak - he hasn't grasped the essential fact that to stop our country going down the plughole he must cut expenditure in order to cut taxes which is the only way of stopping collapse.

-----------------
Michael McGough and GBE -you're both in denial! The eurozone wouldn't have us as a member while we are collapsing for we would bring the euro down with us. It sometimes seems to me that half this list have no concept of the catastrophe ahead which has to be stopped. Stop playing games please.

[ChrisD]

"The leader in today's Daily Telegraph repeats that allegation, but then that was written before this morning's Times hit the newstands"

Why are you giving floor space here to that rag's campaign against the Shadow Tory Treasury team? And, why are you trying to excuse the fact that they were caught out completely by George Osborne's attack on the governments handling of the economy in the *Times*?

"Will this robust move silence his critics? Or will he now be accused of going too far?"

That is beyond being hypocritical? Either Cameron and Osborne were wrong not to attack the government robustly over the last few weeks, or they were right to see the risk of being accused of being opportunistic by the media?
I think they called it right.

[Jim F]

Osborne is just stating the "bleedin' obvious", Sterling is on the ropes. Has been for 12 months or more. Osborne needs to get ahead of the curve. Cameron needs to get angry, just as he did with Haringey SS, with the damage NL are doing, and to explain to the electorate the medium term implications of what Brown and Darling are doing. NL have worked out that some short term relief will be seen with deflation and lower interest rates then an horrendous inflationary surge will ensue. If Cameron can explain this to people, he will at least be seen as economically prescient and competent when the time comes.....

[Raj]

I want a Shadow Chancellor who is not just experienced but also spitting with rage at the damage Labour is doing to the UK.

Obviously politicians have to make the best of difficult situations, such as when members of opposite parties come across each other at events. If Osbourne had done anything other than smile and get on with things he'd have been criticised as being immature.

He can't pander to people like you who want him to start a fist-fight/verbal slagging match every time he comes across a Labour minister.

[Malcolm Dunn]

Some of the posts on this thread are so predictable.
A couple of facts, John Redwood was totally supportive of George Osborne's speech. They are both against unfunded tax cuts. The Labour response has been lamentable. The run on sterling occured BEFORE any comment from Osborne, not after. It is directly attributable to inept government policy.
Resident Leftie, you're happy with the pound at its current value are you? Yes it does help some of our shrinking manufacturers but as net importers of both energy and food Britain loses.
Come on Gezmond, Louise etc etc you all claim to be Conservatives lets see some Conservative ideas from you not just the never ending whinging!

[The Bishop Swine]

Louise:

So long as Cameron is leader -

(a) Redwood will be marginalised
(b) Clarke will be marginalised
(c) Davis will remain on the backbenches

You may well be right, although I do not have access to DC's mind. If he had any political instincts (and I hope he has) he would throw those of us who belive in these guys a bone. A good leader knows when to bend. A great leader knows how to deploy his troops.

[ChrisD]

" A couple of facts, John Redwood was totally supportive of George Osborne's speech. They are both against unfunded tax cuts. The Labour response has been lamentable. The run on sterling occured BEFORE any comment from Osborne, not after. It is directly attributable to inept government policy."

Spot on Malcolm!

I await the attempts by the media, and in particular the BBC to explain the charge made by Brown against Osborne without showing a graph of Sterling's performance during the last 2 months while he was supposedly being the economic superman portrayed in the media?

[christina Speight]

Malcolm Dunn at 14:34 Redwood supports tax cuts but he also demands expenditure cuts as well and he spedifically mentions unelected Regional government and ID cards. This is the crucial difference. This is big money he's talking about.

And listen to what Louise writes. She's frantic at our limp-wristed stance as so many of us are!

[GB£.com - A Ron not a Roon]

"It is directly attributable to inept government policy."

It started on the morning it was announced that Britain would be in recession through 2009 and Mervyn King was quoted as being ready to slash rates even more.

I'm not sure how the Tories can be both in favour of slashing interest rates and propping up the GB£.

The joy of opposition I suppose.

[Yet Another Anon]

Sterling is dropping quite sharply now, but George Osborne really gives no reason to believe that if he were Chancellor of the Exchequer now that he would be doing anything to make it fall any less sharply - is he condemning interest rate cuts - not that I can see, is he going to propose buying pounds or in the short term taking action to cut public spending and reduce the Budget Deficit, none of the 3 main parties are proposing this.

[pp]

The trolls will obviously troll whatever happens -- first they say george isn't respected in the city; now they say the city hang on his every word and what he says is dangerous -- they say he should go because he isn't attacking browns record; now they criticise him for attacking browns record; first they say that everyone and his dog could do a beter job, now everyone (who matters) and their dog are supporting osborne in his position.

Go George!

[Mydogfido]

Join the euro. That's the answer. Get into a big club, not be a small minnow in todays world.

[Louise]

Bish - you are right, if DC had any political backbone he would probably not have lost Davis in the first place. The problem here is that we assume/expect too much of him in all of this and forget he is in this up to his eyeballs too - part of the problem. He has little room to manoeuvre here, and is very brittle at this point - there is no space in which to turn around and in that capacity I hope for our sakes he breaks soon so we can reverse the trend in the polls.

[David Belchamber]

The Bishop Swine at 12.21:

"The question was "Was George Osborne right to raise the prospect of a collapse of sterling?"
The Answer is YES he was absolutely right and it’s about time he started to fight Brown at every opportunity".

As someone else has pointed out, the run on the pound has already taken place, so I concentrate on the second part of the comment.

Might it have been even more effective had GO pointed out that every time we have a Labour government we end up with boom and bust, either accompanied by devaluation as with Wilson or having to go cap in hand to the IMF to be bailed out? In 1968 and 1976, they were also forced to cut public spending.

I want the shadow treasury team to attack Gordon Brown vigorously for the part he played in making our recession far worse than it should have been. John Major and Howard Flight have this week analysed the main causes should the shadow team not know what they are! John Redwood regularly posts trenchant criticisms of Brown's major mistakes.

Once the voters are clear where the bulk of their problems come from, we might be able to move forward and suggest ways of mitigating the problems, such as targeted reductions in public expenditure (quangoes, consultancies, ID cards, regional assemblies etc) that do not affect mainline services.

Then tax cuts, largely funded from these savings, shoul be aimed mainly at the lower paid. I suspect the only difference between that and Brown's idea will be that with him there be little or no reduction in government waste.

[Steve Tierney]

I dont think he went far *enough*, but its better than nothing.

We could be risking absolutely collapse of the pound, default on our debts, a plunging economy from which we will never recover.

Does that seem over-the-top? God I hope so.

[christina Speight]

Yet Another Anon at 15:43 - Osborne merely said rthat if Grown's determination to fund tax-[cuts through borrowing has already driven the pound down and if he doesn;t dfrop the idea the pound will go into freefall, Brown won't be able to borrow and the rest of us will lose any savings we have.

Osborne, however, can only do what needs to be done by cutting expenditure drastically. Redwood showed how popular THAT was on Any Questions.

-------------------
Mydogfido at 16:26 - Haven't you READ what's been said about that already? Or are you just posting out of the blue and out of ignorance.

-------------------
Steve Tierney at 18:07 You're RIGHT! And those who treat this as an academic exercise as to winning an election had better wise up QUICK to the ultimate disaster which could happen.

[Mike]

Seeing Brown on the news calling for a non-partisan approach to the economy showed that Osborne hit the target bang on.

I'm gob-smacked at the BBC, Osborne states a fact, they play the man not the message.

Brown's appeal for international tax cuts (a silly idea) has fell flat. Hopefully that'll be in the papers and then perfect time to take the initiative.

With voters, I think it's a start but as the bad news keeps coming, the anger will build.

My advice now would be to examine government waste, people are hurting - why should government be wasting our money?

Cut waste, cut taxes.

[Louise]

David - the problem is that negative campaigning cost us the last two elections, so far as the wider media were concerned. Anger is only productive insofar as it generates solutions to the problem. Wasted anger led in particular to the 2001 election campaign and the idiotic billboards the Tories ran at that point in time. I saw them every day on the bus back and forward between university and my halls and I just giggled every time. 2005 was better because the frustration with Labour generated some positive forward momentum. I do agree we need to be negative at some point and question the government's policies but this is impossible if we are still largely keeping to their own plans. We are tangled up in a mess which requires leadership to be shown to get us out of it. So far Cameron hasn't shown his wonderful political genius, enough to question whether he actually has the guts to run the country or whether he just enjoys being LoO too much (if you look at the "normal" responses to the Baby P issue they are largely negative and people suggesting he do more of this stuff to batter Brown are accused of cynicism rather than applauded for their genius).

We can pamphleteer all we like about the causes of the economic crisis and what usually happens under a Labour government, but if George cannot offer more than just trenchant criticism and peddle a "scorched earth" line without significant positive elements to the campaign we will inevitably fail because people will stick with "the devil they know".

Hands up all those, by the way, who thought Howard Flight's last intervention in the political game was a good move. I think he cost us perhaps not the election but a good few percentage points in swing in jittery marginals, as well as frustrating plans regarding childcare allowances unveiled the next working day. What is sensible economics is not sensible politics and I am wary of trusting him to come up with something that will resonate widely with people. Redwood is more careful but still - and I know him personally and have been to some interesting talks he's given - rather dry and unaware politically. George at the other extreme makes daft suggestions like the "scorched earth" issue which should have Cameron reaching for the phone to bawl him out. The high water mark of Conservative politics for me was Howard's speech to conference in 2004 - it went downhill for a number of reasons, partly Blair, partly Flight for puncturing what was a good lot of momentum, and partly because we were so far behind it would have taken a miracle to actually win. Flight alone cost us about 40 seats. Had we a leader of Howard's capability now we would be wiping the floor with Brown, but Cameron shows no backbone when the going is bad and allows his subordinates to get away with the pomposity Osborne displays in the article over "scorched earth".

It's not enough simply to be negative. We have to show we have a coherent agenda and purpose in government rather than bragging. It's not necessarily the case any more that they are guaranteed to lose the election; my feeling is that people are beginning to go back because the Tories haven't got any consistent alternative. Whether it has to come in the form of policy is debatable, given this week's disappointing launch, but it has to come soon and it has to be based on more than just braggadocio.

[Malcolm Dunn]

Who'se bragging Louise? Go on give us some examples?
Are you seriously suggesting that the opposition should be positive about a massive increase in borrowing? I know you claim that you 'delivered' Wokingham for the 'politically unaware' John Redwood so please give us the benefit of your wisdom as to how we are going to win the elction.

[Mr Disgusted]

As the £s value drops dramatically, will those third world countries that we freely shovel money into expect a pro rata rise or will they have to curtail their space programmes for now.

No wonder we're in a fix!

[christina Speight]

Cannot we stop talking about winning an election until we've worked out (possibly on the lines I've suggested) of how to make sure there is a viable country here to govern. The party is still playing games - This is serious

If anybody had listened to Redwood talking sense on Any Questions' and especially noted the audience reaction they'd know there's still a chance of averting disaster but it's a slim one.

[Louise]

Malcolm - go and mention my name (my surname's Stanley) to Rob Wilson and Richard Benyon. I didn't claim anything on Wokingham, sorry for that impression, but to be honest with you, you are misrepresenting my position and you know it.

Redwood is a good wonk but not a brilliant politician. He has some very intelligent contributions to make but is fundamentally unsure about how to present them properly or moderate his views to form a political platform. The problem with our people is that they are happiest when they are producing analyses of the situation but cannot seem to come up with any solutions. Until they do, and until they are used properly by the leadership, there is no chance we can ever form a government that will last more than a few months before collapsing, particularly if there is a hung parliament (miracles do happen).

Osborne is bragging about the "scorched earth" policy being because Labour have lost the next election. That's stupid given the possibility of losing it right up to polling day (Neil Kinnock might have something to say). Cameron's position on Baby P is as much putting people off as well as turning people on. Osborne's comments, while reasonable on the state of the pound, were way off the mark on election hubris and suggests a very strong streak of complacency running right through the leadership, which also says to me that nothing will come out of CCHQ in the foreseeable future to check the current slide.

At least I'm being honest with myself. I wasn't last time round (but my enthusiasm probably helped rather than hindered the campaign), but I am now.

[Matt Wright]

Can we just look at some facts. 1) Sterling is diving, 2) Brown does not think he will win a working majority even if polls improve for him. So is he operating some form of "scorched earth" policy? Actually I think he is, in so much as he thinks he has nothing to lose. He can borrow yet more and offer tax cuts and try and keep Labour from a big defeat. Yet he knows if the Conservatives get in with a small majority or have to do a coalition deal, they will be faced with a very bad situation. Is he and his spin doctors that cynical. Sadly I have to say, absolutely yes! Don't forget this is the party that preteneded to offer a tax cut to wrong foot the Conservatives which actually ended up as the 10p tax debacle that hit the low paid. He and his MPs sat on this for many months hoping no-one spotted it. Now he is playing around with the whole economy. Folks, this guy was never a good chancellor, he has been an absolute disaster. Its time to spell that out, loud and clear, in facts and figures and most of all in ways ordinary people can understand. Quite frankly that is our duty as an opposition.

[Louise]

BTW Redwood was still playing the metric martyr at the last election. That kind of thing puts off more people than it wins over, because most people of my age and under have been taught from infancy to think in metric. I was with him when he showed me a splash in the Mail right before the last election when he got excited about the Mail taking up his concerns with voters. I didn't say it at the time, but I have no interest in "metric martyrdom" and I felt it wasted space in which he could be promoting the core agenda.

I like him immensely as a person but feel his political radar is somewhat lacking.

[Louise]

Matt - it's still far too early to be talking about victory. That is for the day after the election.

Two words - Neil Kinnock.

[pp]

Hell has no fury like a woman scorned

People with history need to be watched until they disclose that history to you (don't be sent on a wild goose chase investigating it yourself) they have the facts, if they don't disclose them then you have to question their motives.

What has mandleson said about his dicussion of eu tarrifs with oleg...

[The Bishop swine]

I think we know instincivly that labour is propping up a roof thats about to burst in. We are in deep do do's Brothers. I suspect that a retraction and a deveolution is happening. This will not be a plensant trip to Tibet.
Unemployment will be 16% by the end of 2009.
Whats worse is the black economy is shrinking as well.
It will be essential to keep a coolhead.
Labour is about to come unstuck, thats a great oppertunity. I do notice that most of the posters on this thread seem pro labour at least the first few. Brown has lost the plot, he is injecting money that he simple does not have. There will be no tax cuts only talk of them.

[Malcolm Dunn]

er ,I'm not misrepresenting you on anything Louise. I suggest you look up your own posts.

[David Belchamber]

Louise, I am not suggesting a negative campaign. If you have a problem - and this country has one hell of a problem - you first analyse the causes of that problem. Then you can suggest positive solutions.
The first duty of the opposition is to oppose the government where it thinks the government is not acting in the country's best interests. I do not believe that Brown was acting in our best interests by (i) taking away from the BoE sole responsibility for the oversight of the banking sector, (ii) making the MPC responsible for only one side of the coin and (iii) for requiring the MPC to control an artificially low rate of inflation among other things.
I would ask you to ignore the fact that Howard Flight was the author of "From Boom to Bust" and just concentrate on the contents or read John Major's article in the Times the other day.
They and many others show clearly that Brown's stewardship of the economy was not outstandingly good as Brown would claim but was deeply flawed and would have caused our economy great problems even without the American sub-prime fiasco.
We should not be having this analysis at this stage of the proceedings; we should by now be on positive teritory showing how to mitigate the effects of recession.
Oh and by the way, there is no harm in reminding people that Brown's great save the world escape plan was based on what Sweden did about 16 years ago.