Brown and Cameron may have clashed but the FT’s story itself is bogus since neither the IMF nor the ECB is talking about Britain’s pressing and immediate need to cut the deficit before investors cease to buy Treasury bonds. They are talking primarfily about the eurozone and maybe the USA.
I see that Jeremy Warner in his Telegraph blog says “Brown and Cameron [need] to get down to the detail and quickly’. He obviously hasn’t noticed in his diary that December 9th is the date for the Pre-Budget Review when Darling will release figures and presumably policies. This will open up the debate.
His main article is more sensible and I will report it in the morning
The divide, always there, between 'do-nothing' Brown and Cameron is gradually widening
Christina
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FINANCIAL TIMES 24.11.09
Brown and Cameron clash on deficit
By Jean Eaglesham and Brian Groom
Gordon Brown and David Cameron clashed over plans to tackle Britain’s budget deficit on Monday, as the party leaders sought political advantage on an issue that is set to dominate next year’s election.
The prime minister and Conservative leader both claimed international backing for their approach, as each warned the annual conference of the CBI employers’ organisation that their rival’s strategy would jeopardise the economic recovery.
Mr Cameron rejected suggestions that he had switched emphasis from “austerity” measures to tackle the £175bn deficit to growth in response to fears that his party’s poll lead was under pressure.
Asserting that his message had not changed, Mr Cameron said his plans for an “emergency growth Budget” within 50 days of taking office were interlinked with his call for urgent measures to tackle the deficit.
“Dealing with this deficit is not an alternative to economic growth – the two go hand in hand,” he said.
The Tory leader asserted that a failure to address the deficit with sufficient urgency posed the “greatest single risk to sustained economic recovery”. He told delegates there was a growing consensus behind the Tory argument that “urgent action is vital to recovery”.
But the prime minister scored a coup when Dominique Strauss-Kahn, managing director of the International Monetary Fund, lauded Mr Brown’s global leadership and backed his warning that fiscal stimulus should not be withdrawn too quickly.
“We recommend erring on the side of caution, as exiting too early is costlier than exiting too late,” Mr Strauss-Kahn told the event in London.
But Mr Cameron’s approach received tacit backing from the European Central Bank, which warned that delays in unwinding exceptional measures taken to combat the economic crisis could backfire.
Speaking in Madrid, Jean-Claude Trichet, ECB president, said threats to public finances posed by stimulus packages meant that “there is an increasingly pressing need for ambitious and realistic fiscal exit strategies and for fiscal consolidation”.
Lorenzo Bini Smaghi, an ECB executive board member, said on Friday history showed that the late implementation of “exit strategies” could cause future crises.
“In my view, the ‘err on the side of being late’ paradigm is potentially as dangerous as the ‘productivity growth’ paradigm of the late 1990s and the ‘fear of deflation’ paradigm of the early 2000s, which led some advanced economies to implement policy stimuli for too long, sowing the seeds of the subsequent crisis,” Mr Bini Smaghi said in Paris.
Mr Brown sought to capitalise on the IMF’s support for his stance by suggesting that the Tory growth “soundbite” was meaningless without substantive policies to support it. The prime minister criticised the Conservative call for immediate action on the deficit, warning that “choking off the recovery too soon would be fatal to world growth”.
Business reacted with bemusement to the ferocity of the debate, suggesting that the clashes were largely for political effect since – whoever wins next year’s general election – significant spending cuts were unlikely to bite until 2011-12.
“The instincts of Mr Cameron and Mr Brown are clearly different. There may not be in policy terms all that much [to separate the duo],” Richard Lambert, CBI director-general, said.
“Business is focusing on a different issue [to the rhetoric on exit from the fiscal stimulus],” said John Cridland, CBI deputy director-general. “Business knows that significant fiscal tightening has to be achieved at some point in the cycle but it’s how we do it.”
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Additional reporting by Ralph Atkins in Frankfurt
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