"Britain is uniquely vulnerable to the deepest economic slump since the recession of the 1990s because the Government has left itself no room to cut taxes, a report warned yesterday.
The economy faces one of the sharpest slowdowns in the world, the Organisation for Economic Co-operation and Development (OECD) found.
In an unusually explicit rebuke, the report blamed the Government – and by implication Gordon Brown – for borrowing and spending too much in recent years.
This “excessively loose fiscal policy” left little, if any, room to cut taxes and save the economy from a deep decline, it stated.
The assessment, in the OECD’s six-monthly report on the world economy, will be seen as an attack on the Prime Minister as he faces the worst popularity ratings since polling began during the Second World War.
In its gloomiest assessment yet of Britain’s prospects, the Paris-based institution warned that:
Britain is highly vulnerable to the credit crisis, and house prices will continue to fall, possibly by 10 per cent;
...
The OECD has warned repeatedly that by spending and borrowing so freely since the turn of the millennium the Government would leave Britain ill-equipped to deal with an economic slump. It said yesterday that this had come to pass.
Forecasting that unless the Government raises taxes or cuts spending it will break its borrowing rule, it said: “Much tighter fiscal policy [higher taxes or lower public spending] will be required in the future if the rule is still to be respected.
“While ongoing economic weakness in 2009 would argue against fiscal restraint, the Government’s options have been limited by excessively loose fiscal policy in past years when economic growth was strong.”
The comments are embarrassing for Mr Brown, whose stewardship of the economy both as Chancellor and Prime Minister has come under fire as the housing market has turned and the broader economy has slowed. "
The report has the political opinions of the government and opposition:
"Philip Hammond, the shadow chief secretary to the Treasury, said: “This worrying report confirms what the Conservative Party has been saying all along — Gordon Brown failed to fix the roof when the sun was shining.
“He borrowed in a boom, leaving us with the largest budget deficit of any industrial economy. Now we are all paying the price.”
The Treasury said it did not agree with the OECD’s forecasts. “The UK economy remains strong, and is well placed to get through these global problems.” "
For how long will the Treasury be able to push the line that the UK economy is strong and well placed to ride out the global problems. Also if the economy is well placed to get through the global problems then why can only Gordon Brown lead us through these troubled waters, couldn't anyone?
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