Latest Government Humiliation

The government has been hit but another humiliating story this week, following the publication of a letter from the chief of the Office for Budget Responsibility (OBR) to David Cameron. During a speech made on Thursday by the Prime Minister, the claim was made that “[according to the OBR] the deficit reduction is not responsible [for the economic downturn], in fact it’s quite the opposite.” In a rather embarrassing turn of events the chief of the OBR, Robert Chote, explained that this was simply not true. This is the first time that the OBR has responded in such a visible fashion since it was set up by the current coalition government in 2010. This all plays very well into the Labour line that the government’s austerity policies are crushing the economy, Ed Balls was particularly gleeful following this recent embarrassment:

“A Prime Minister, who is desperately trying to defend an economic plan which is clearly failing, the economy flat lining, our deficit getting bigger, but to do so by being fast and loose with the facts, that is unbecoming of the office of Prime Minister.”

It does prove that more debate must take place over the success of the government’s austerity policy, and whether it should be stopped to allow the economy to grow. In international news, Japan’s recently elected Prime Minister, Shinzō Abe, has announced his intention to follow stimulus policies to get the economy moving. Japan has a much larger deficit that ours, it should also be noted that America (also with a larger deficit) has a growing economy, primarily thanks to the stimulus policies pursued by Obama in the first half of his first term. At the same time European nations that have followed the harshest austerity such as Greece and Spain are looking at a shrinking economy. The coalition needs to seriously debate their current economic plan as it is simply not working; a ‘Plan B’ must be thought up as ‘Plan A’ is failing epically.