In Depth

Foreign bankers warn against Labour – surprise, surprise

Should George Osborne really be invoking foreign investment bankers in support of a Tory victory?

It may be St George’s Day, but George Osborne has stirred up a hornet’s nest by quoting a list of foreign investment bankers who say the election of a Labour government backed by the SNP would be an economic calamity for Britain.

With new figures due today on government debt and borrowing in March, and with the respected Institute for Fiscal Studies publishing its analysis of the economic plans of Labour, Conservatives and the Lib Dems this morning, the economy is centre stage in the election campaign once again.

Ed Miliband will claim the Tories' planned £12bn public spending cuts would be the deepest in the western world and a far cry from the Tories’ promise of "the good life" for Britain after the general election. David Cameron, he will say, is guilty of “a grand deception”.

But Osborne got his boot in first by claiming in an interview in the Daily Telegraph that a Treasury analysis has shown the SNP would force a Labour government to add £6bn to the bill for debt interest - the equivalent of £358 for every family in Britain.

Then, on Radio 4’s Today programme, Osborne dropped his clanger. He quoted Canada's largest bank, the Canadian Imperial Bank of Commerce (CIBC), saying that a Labour government supported by the SNP would lead to a "dangerous cocktail where taxes are going up, spending is going up and interest rates are going up".

And he said CIBC had been joined by US investment bank Morgan Stanley, Deutsche Bank, and BlackRock - the world’s largest asset manager – in predicting much the same. 

“These are economists and investors who make a living predicting what is going to happen in economies around the world,” claimed Osborne, “and this week they have come out in a chorus to point out the consequences for the UK of departing from the [Tory] economic plan.

“These are not participants in the general election. They are international investors and professional observers.”

But as Michael White of The Guardian was the first to tweet: “Warning against Labour George Osborne on R4 Today cites major investment banks, the very people who caused the financial crash & recession!” 

White won’t be the last to complain. Not just because the doomsayers are investment bankers – but because they’re foreigners. Osborne will be criticised for relying on the support of foreign investment giants who pay taxes overseas, just as there would be criticism if British institutions urged voters in the US not to vote Democrat in the presidential elections.

Cameron is attending the two-day heads of government EU summit on the migrant deaths in the Med. He will be hoping that his most senior lieutenants – Osborne and William Hague, who’ll be representing the Tories on the BBC Question Time panel tonight – can keep plugging away on economic competence and finally swing some of the 25 per cent who were listed yesterday in a YouGov poll for The Times as 'don't knows'.

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