Show Hide image

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.

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".


Eleanor Margolis is a freelance journalist, whose "Lez Miserable" column appears weekly on the New Statesman website.

Getty Images.
Show Hide image

Labour tensions boil over at fractious MPs' meeting

Corbyn supporters and critics clash over fiscal charter U-turn and new group Momentum. 

"A total fucking shambles". That was the verdict of the usually emollient Ben Bradshaw as he left tonight's Parliamentary Labour Party meeting. His words were echoed by MPs from all wings of the party. "I've never seen anything like it," one shadow minister told me. In commitee room 14 of the House of Commons, tensions within the party - over the U-turn on George Osborne's fiscal charter and new Corbynite group Momentum - erupted. 

After a short speech by Jeremy Corbyn, shadow chancellor John McDonnell sought to explain his decision to oppose Osborne's fiscal charter (having supported it just two weeks ago). He cited the change in global economic conditions and the refusal to allow Labour to table an amendment. McDonnell also vowed to assist colleagues in Scotland in challenging the SNP anti-austerity claims. But MPs were left unimpressed. "I don't think I've ever heard a weaker round of applause at the PLP than the one John McDonnell just got," one told me. MPs believe that McDonnell's U-turn was due to his failure to realise that the fiscal charter mandated an absolute budget surplus (leaving no room to borrow to invest), rather than merely a current budget surplus. "A huge joke" was how a furious John Mann described it. He and others were outraged by the lack of consultation over the move. "At 1:45pm he [McDonnell] said he was considering our position and would consult with the PLP and the shadow cabinet," one MP told me. "Then he announces it before 6pm PLP and tomorow's shadow cabinet." 

When former shadow cabinet minister Mary Creagh asked Corbyn about the new group Momentum, which some fear could be used as a vehicle to deselect critical MPs (receiving what was described as a weak response), Richard Burgon, one of the body's directors, offered a lengthy defence and was, one MP said, "just humiliated". He added: "It looked at one point like they weren't even going to let him finish. As the fractious exchanges were overheard by journalists outside, Emily Thornberry appealed to colleagues to stop texting hacks and keep their voices down (within earshot of all). 

After a calmer conference than most expected, tonight's meeting was evidence of how great the tensions within Labour remain. Veteran MPs described it as the worst PLP gathering for 30 years. The fear for all MPs is that they have the potential to get even worse. 

George Eaton is political editor of the New Statesman.