Chancellor urged to stick to debt reduction plans

The OECD has backed George Osborne's plan to reduce debt, but warns that the economy will stagnate.

By Eleanor Margolis Published 09 September 2011

The Chancellor of the Exchequer, George Osborne, has been advised by the Organisation of Economic Co-operation and Development (OECD) to stand firm on his debt reduction plans, in spite of their warning that the economy will stagnate.

The economic thinktank believes that the recession is not over, the Guardian reports. Chief economist Pier Carlo Padoan said, "Growth is turning out to be much slower than we thought three months ago, and the risk of hitting patches of negative growth has gone up."

UK economist Alan Clarke, of Scotia Capital, expressed surprise at the OECD's "grim" forecast of 1.4 per cent growth this year: "This is likely to reinforce pessimism if the usually pretty conservative OECD is now more pessimistic than the most pessimistic amongst us."

Padoan stressed that the Chancellor should stand by his deficit-cutting programme, rather than implementing Labour's plan of temporarily cutting VAT to stimulate growth.

Shadow Chancellor Ed Balls called the OECD's forecasts for the next six months "extremely concerning" and blamed the UK's slow economic growth on Osborne's decision to "cut spending and raise taxes too far and too fast".

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13 comments

Mon, 2011-09-12 18:52 — mike555

@Matt

"I see house prices for August 2011 declined by 1.2% and on a yearly basis, are 2.6% lower when compared to August 2010. "

They're still very high.

"We also need to remember, house prices declined in the whole of 2010, so are talking about a decline on top of a decline. "

Prices fell very slightly in 2010. We're talking of small declines on top of several years of booming prices under New Labour.

"It seems the phrase " Propping Up " springs to mind."

That's right, what do you think would happen to house prices if rates went back to a neutral level of say 5%? I doubt you will answer, as usual.

Sun, 2011-09-11 11:54 — mike555

I wonder how much poorer and how much more in debt families are thanks to the housing boom under New Labour?

Sun, 2011-09-11 18:20 — matthew fox (not verified)

I wish Bozo555 would spend less time on the DailySport website.

Many women are having to quit their job, due to the cut in Childcare Working Tax credit.

Below is an insightful article on the Workingmums website, highlighting the plight of so many families.

http://www.workingmums.co.uk/working-mums-magazine/all/5078194/families-...

I see house prices for August 2011 declined by 1.2% and on a yearly basis, are 2.6% lower when compared to August 2010.

We also need to remember, house prices declined in the whole of 2010, so are talking about a decline on top of a decline.

It seems the phrase " Propping Up " springs to mind.

Sun, 2011-09-11 18:59 — Indu Pendent (not verified)

@matt

Foxy, you did not answer my question or is it that you are incapable of making difficult economic decisions without vote market ?

If child care WTC requires extra borrowing without economic pay back then should the coalition increase borrowing to pay for it?

These are the tough unpleasant decisions the last government left behind for others to clean up the mess.

Sun, 2011-09-11 19:00 — Indu Pendent (not verified)

thats 'voter market research'

Sat, 2011-09-10 12:10 — Indu Pendent (not verified)

Osborne, as Legarde says, is on an appropriate path to reduce the deficit - she says the size of the UK's deficit is bigger than other countries. Labour is totally incapable of making difficult decision in the national interest that we now need to take.

Its a hard fact that millions of people are going to suffer a fall in living standards because of China sucking in the worlds wealth. Its manipulative and cruel to ordinary people to promise to them this will not happen and niave to think it will not. What matters is the UK making the adjustment as fast as possible which will minimise the long term decline and the number of people affected. The future is bright for the top tier of people as they will slot into the new world economy - there is nothing can be done to stop this except trying to prevent the upper working class succeed.

We need policies that stop leveling down ordinary people, take the brakes off them and start letting people get ahead for their families.

Sat, 2011-09-10 13:16 — Awake!

Indu
not being honest now means what's left of the oil wealth in this country will be squandered whilst the politicians battle it out. It's not looking good for the kids.
I will leave when business and family constraints permit, having already made the decision that I can live in Asia. I'm deeply patriotic, but there are too many lazy people in the west, their expectation has been manipulated out of all proportion by politicians. I had the fortune to come from one of the worlds poorest countries so have a sense of perspective- people simply don't get we're at war , with one of the old evils, DEBT

Sat, 2011-09-10 14:11 — matthew fox (not verified)

Indu Pendent, is still being lead up the garden path.

At least Indu Pendent has stopped believing that Osborne has liberated families.

Sat, 2011-09-10 14:36 — Indu Pendent (not verified)

@awake

Thats a pitty. The UK needs people like you. I came from a poor (relative in UK terms) working class background and take no lunch for granted or treat anything as a birth right.

We are looking at going too the same and taking the business with us -- have already started setting up there. I can get stuff done for 1/6 the cost by graduates who speak 3 languages and work 11 hours a day. Pay a lot lower tax out there.

Sat, 2011-09-10 14:44 — Indu Pendent (not verified)

@matt

Foxy, Osborne it doing the appropriate thing to liberate families from the shackles of Labour's debt and the largest peace time deficit left by your friends.

Of course I forget - head so far in your fox hole the world has passed you by. Have you seen the recent resignation of the German from the ECB - the Germans dont understand why they have to bail out other countries which wer incompetently run in the last decade and ran up huge debts.

You still have not answered my question - should the coalition increase or decrease borrowing? Are you waiting for the vote market research results?