A sensible outline and template for the Tories!
Christina
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SUNDAY TELEGRAPH 4.10.09
Tories need to come up with solutions for our fiscal state
"The immediate priority is to preserve Britain's credit rating with a clear plan to deal with our huge budget deficit." So said George Osborne back in June. So what has the shadow chancellor since said about our dire fiscal predicament? Absolutely nothing.
By Liam Halligan, Economic Agenda
Osborne has been talking a lot about the UK's woeful public finances. He's become adept at pointing out "we're in this mess because Gordon Brown racked up so much debt". What a shame the Tories didn't grasp that three or four years ago, when Brown's reckless borrowing was sowing the seeds of this fiscal crisis. Some of us shouted it from the rooftops.
Back then, rather than challenging Labour, the Tories did what their financially illiterate PR folk told them to do. They repeated ad nauseum they would cut debt and still match Brown's spending by "sharing the proceeds of growth".
Under the Tories we could have it all – high spending and fiscal responsibility. It's precisely because the incoming government spouted such vapid nonsense for so long on fiscal policy, that they now need to show they mean business.
Yet while Osborne talks a lot about fiscal policy, he says nothing. I've heard the speech about Labour "failing to fix the roof when the sun was shining" at least half a dozen times. Meanwhile, the UK's solvency rests on a gilts market itself reliant on money printed by the Bank of England. This fiasco is unsustainable – so it will not be sustained.
In the first five months of the financial year, the UK borrowed £65bn – two-and-a-half times more than in 2008. At this rate we'll borrow £220bn in 2009/10 - £50bn more than predicted in April's budget. With tax receipts down 11pc year-on-year, we may in fact need £250bn of finance this year, with borrowing of £200bn+ for the next two years as well.
The markets simply won't have it. Our national debt is set to breach 100pc of GDP – from 38pc a couple of years ago. What's fatal, though, isn't the size but that rate at which are debts are rising.
At his party conference in Manchester, Osborne needs to shove the fiscal debate forward, forcing the Government to take radical steps in this autumn's pre-Budget report.
The shadow chancellor needs to say something, not just talk. After all, as he told us in back June, preserving the UK's credit rating is absolutely the "immediate priority
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