Bullish Osborne seeks to defy gloomy economists
Chancellor gives combative performance on Today prog, hinting IMF report will be supportive
Chancellor George Osborne today reinforced a successful behind-the-scenes campaign by Downing Street to rubbish the weekend calls by more than 50 economists and academics to adopt 'Plan B' for the UK economy - in other words, to slow down the deficit-reduction plan and help promote growth.
The economists' letter to the Observer was timed to question confidence in Osborne's "breakneck" Plan A just before the International Monetary Fund delivers its annual verdict on Britain's economy in London today.
Osborne rejected calls for a change of course, and was so bullish on this morning's Today programme that he was able to drop a strong hint that within a few hours, the IMF would give its broad support to his strategy for cutting the UK's deficit. "Yes of course there are some choppy conditions out there," Osborne said, "but it is one-sided to say there are no signs of growth in the economy."
The IMF, under its acting managing director John Lipsky, has been in London for a fortnight taking evidence on the UK economy, and the Chancellor clearly had advance warning of what it was about to say.
In a combative performance reminiscent of Sepp Blatter denying any problems existed at Fifa, Osborne ran rings round interviewer Sarah Montague, even accusing the BBC of "over-interpreting" the warning by Pier Carlo Padoan, chief economist at the OECD, that Osborne's deficit reduction plan might have to be watered down.
Even Vince Cable, the business secretary, who warned against being "lashed to the mast" of deficit reduction, was heading to the GMB conference with a message that, at least on the economy, the coalition is united behind Osborne's plan A. "Like it or not," Cable was due to tell the union, "the fiscal policy has to remain tight for the foreseeable future."
However, buried in Osborne's bluster on the Today programme was a hint that he is prepared to allow some flexibility through the "economic stabilisers", which may ease the cuts in spending if the economy fails to grow as expected.
Osborne's radio performance should be seen as part of a huge public-relations exercise by Downing Street to shore up confidence in his conduct of the economy.
Having fallen down on the job recently - with the sale of forests, and the reforms to the NHS - Downing Street is learning from the ruthless spin machine that Ed Balls once operated on behalf of his former boss, Gordon Brown.
Tory bloggers, tweeters and old-fashioned news print columns today swallowed the line put out by Downing Street yesterday that the economists who attacked the Osborne strategy in yesterday's Observer are just a bunch of Brownites.
Their chief target was Jonathan Portes, the director of the National Institute of Economic and Social Research, who gave weight to the economists' message by telling the Observer: "You do not gain credibility by sticking to a strategy that isn't working."
Portes was until February this year the chief economic adviser to cabinet secretary Sir Gus O'Donnell. But Osborne's spinners smeared Portes by briefing journalists that he was "twice given senior posts by Gordon Brown".
True, but the man now being portrayed as a Brown lackey was also the speechwriter at the Treasury to the right-wing eurosceptic Conservative chancellor Norman Lamont in the Major government (until, ahem, that unfortunate business with Tory mismanagement of the economy called Black Wednesday).
Portes was also trusted sufficiently in 1991 to be made Lamont's private secretary at the Treasury. And who was the chancellor's special adviser in the same office at the time? David Cameron.
Osborne and Cameron will be hoping that that any lingering doubts in the IMF report about Osborne's Plan A will be overshadowed later today when Dominique Strauss-Kahn, the disgraced former managing director of the IMF, appears in court in New York charged with sexually molesting a hotel maid.
If all goes according to plan, the Strauss-Khan allegations will dominate the news tonight, not the fear stalking the corridors at Whitehall that we may be heading for high inflation and stagnation - the dreaded stagflation.
The Bank of England monetary committee is unlikely to raise interest rates from their record low of 0.5 per cent later this week. But that will do little to breathe life into the economy. It is just to be hoped that Dr Osborne has got his prognosis right.
EDITOR'S UPDATE, 15.32: Since this item was published, the IMF has issued its report. As predicted by the Mole, the IMF was broadly supportive of the coalition's economic policy but warned that there remained "significant risks" to inflation, growth and unemployment. ·
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