Osborne's "flexibility" explained

Rhoda Klapp

This is no more than a policy of controlled decline. It will not do. It is an apology for a policy, and apology as policy. Pathetic.

Peter From Maidstone

So why, in your opinion, is the government not mentioning that the cuts are only 1% a year? Why are they allowing themselves to be presented as slash and burners?

Nick

The government's PR has been appalling. Why have they allowed themselves to be portrayed as inflexible and extreme cutters when neither of these accusations is correct.

And why doesn't Osborne play a more proactive part in talking up growth.

AlanL

Given all the accusations of Dave & George having privileged upbringings, it would surely be far too greedy for them two have TWO plans (A and B), when poor Ed & Ed do not have a single one to share between them.

Chris lancashire

Sound strategy, sound economics. Osborne will stick with it and reap the benefits just in time for the next election.

Perry

So, - no Plan 'B' then.

I hadn't yet realised there was a Plan 'A'.

Lonesome Dave

Oh my, how I enjoyed listening to George on the Toady "show" this morning....

The BBC woman - was it a Sarah M? - got a reasonably good telling and could only try to constantly interrupt in the time-honoured Toady fashion with cries of 'shore' (sic) and 'but, but, but...'

Get it done George! Carry on Chancellor!!

daniel maris

What I'd like to see is the size of the cuts with redundancy payments stripped out in otherwise the difference between last year's budget and this year's minus redundancy payments. Then I think you will see the real cuts (the structural cuts if you like) are closer to 10% in many areas of the public sector.

This comes back to the point I make that it would have been far better to have something like a redundancy freeze that would build over five years, thus saving on redundancy costs.

Hugo Chav

Fraser,

I highly recommend this 20 minute audio interview with Jim Rickards,in which he discusses how the FED are using Financial Repression to try and get out of under the debt pile:

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/6/4_Jim_Rickards.html

The BoE are in full flight with this process.

======

As to Mad Dog Ozzy Osbourne, he just reminds me of Bonkers Brown. We need Allister Heath as Chancellor!!!

Nickle

But the greatest need for flexibility is on debt interest. About 22 per cent of UK gilts are inflation-linked, so the taxpayer will have to shell out billions more as inflation continues to rampage.

=============

Only part of the story.

On top of the 1.05 trillion gilt debt of which 22% is inflation linked, there are the other debts.

Civil service pensions - inflation linked - 1.3 trillion

State pension 2.4 trillion - inflation linked

State second pension?

Nuclear decomissioning?

Benefits are inflation linked.

It's a real storm, and even the economist isn't telling the truth.

Nickle

Plan B, is that the lending stops, and the government is in a huge mess.

oldtimer

This all sounds like weasel words to me, with the cyclically-adjusted "structural deficit" the biggest weasel words of them all. Cameron had another expression he used in his Lancasster House garden speech with Obama, referring to a "lower deficit as a % of GDP".

It sounds as though these two sets of weasel words offer plenty of scope to keep on raising the defict and the debt by billions of £ a year and still remain within their own defined terms of reference.

PS I am puzzled to which year your reference to 15 April applies and the comment that no budget has been set. But they (the OBR) still rely on assumptions and forecasts in making their projections into the future such as the graph you have produced to reveal the wondrous elimination of the structural deficit (of elastic definition).

john raymon

With 5 trillion debt....500 billion ..over seas...the uk as one way out , And that is they are going to,have to print money.......
not ...billions......they got to think big new world ......about 4 trillion would sort out the uk

Neil Wilson

'Structural' depends on the definition of 'full employment'.

And the one they are using isn't the one that is required - everybody who needs work has sufficient to earn enough to keep them out of poverty.

'Structural' is a weasle word. Like 'fair' it means what you want it to mean.

Neil Wilson

"About 22 per cent of UK gilts are inflation-linked, so the taxpayer will have to shell out billions more as inflation continues to rampage."

Those gilts back private pensions. We could very easily decide that the budget for gilt interest is fixed and only available to insurance companies to cover off compulsory annuity pension payments.

Andrew Fletcher

The uncomfortable truth would seem to be that the bond markets have to be onside - therefore big talk re;cuts - even if they are not that much different from Labour
BUT even Osborne probably knows that this means sluggish growth - although of course he can't be seen to acknowledge this

but frankly lower growth is by far the lesser of 2 the evils

disenfranchised

what it is no one knows. what it isn't is economics.
as for the famous cuts, i think the few who aren't just shrugging realise that there haven't infact (what's 1%, after all) been any, and that we're subsequently deeper in it than we were under the last lot.
the new economies will establish, before too long, exactly how deep that is.....

Charles Barry

Fraser, I wish you would stop bashing the Bank of England. The power the BoE has to reign in inflation is very limited.

Perhaps pointing to some story about a King called Canute might enlighten you?

General Zod

Balls and 52 left wing economists claim Osborne is cutting deeply and recklessly. The right wing claims he is hardly cutting at all and is therefore reckless.

Twho helpful indicators to show him he's on the right course.

Gawain

So in plain English I think this means we're in a God awful mess and there is no real change in sight. We're still spending far more than we earn, inflation is in danger of getting out of control, the unions are getting even more bolshie than usual and the government is so incontinent that it doesn't know how to stop wrapping the job creating private sector up in ever more red tape. Oh, and we've decided we can afford a new war in Libya !

Tony Cook

I am an aging numbskull & that probably explains why I support the Chancellor's plans.

Plan "A" just has to work as GB left us without wriggle room and despite Ball's hot air bouncing the current Labour lot have even less grasp of economics.

On the other hand the manufacturing sector does need some targeted support and this could well be aided by cuts in VAT which at its present level is counterproductive anyway.

Eric

George Osborne is already running 'Plan B'. It was the previous government, specifically Brown and Balls, whose disasterous 'Plan A' got us into this mess in the first place.

commentator

Osborne continues to fiddle while Rome burns......There are no net cuts because the UK is addicted to incontinent public spending and Cameron has promised Merkel to help bail out the Eurozone.

TrevorsDen

peter from maidstone and ms Klap (and nelson as well)

The cuts where people see them are far far more that 1% a year. many costs are fiked and/or are rising. Debt interest, the NHS, pensions, benefits (tax credit costs are rising as part of the, quite correct, policy of getting people into work) inflation costs.

Whats left and what affects people is far greater. And of course we have labours budget overcommittments. We know of defence for minstance where there is 38 billion which has to be clawed back, before other cuts are taken into account - yet in cash terms the MoD budget continues to rise.

nelson is being disingenuous. As he is with remarks like the BoE failing to curb inflation.
where is the home grown demand led boost to inflation which could be curbed by traditional BoE methods? Does Nelson say we should increase the value of the pound to make imports cheaper? Or does he think encouraging us to spend our money abroad would help the economy?

Nelson talks rubbish. The govt can cut its own spending and organise viable spending profiles for govt departments. As to whether that eliminates the structural deficit is down to other factors.

The economy has had its back broken by Labour - who ever said that years in traction would be easy or painless?

Dimoto

You couldn't make it up.

Balls launches one of his rotten, lying, manipulated attacks on Osborne's economic policy, and on the following Monday, the major right wing blogs are all whining and wringing their hands like big girls blouses.

What a pile of ignorant crap are the comments on here.

Olaf Rye

More must be cut. Just rescind those stupid laws that regulate and interfere with our lives, and then sack those hired to uphold and enact these stupid laws. We have too much regulation, too much bureaucracy, and too much government. This, in one move, would suddenly render 'necessary' staff 'unnecessary' and we would be freer again. Of course, this sends shivers down the spine of many civil servants because they know that they are useless. Moreover, there are lots of people that aspire to the idle life of a civil servant because they want job security above all else.

Rhoda Klapp

TD, let's look at what is happening:

The tories are taking the flak for cuts which are not, overall, cuts at all. They are missing the opportunity for real cuts, but taking the pain as if they had delivered them.

They are letting the councils get away with shameful lies about libraries and lollipop ladies having to go when the citadel of council profligacy is unassailed.

They are letting the BBC set the agenda. While they do that they will never achieve anything.

They are coming at the entire lump of government spending from the point of view of preserving what they can. That is a socialist approach. They ought to be saying just what MUST the government do, all else may be in line to be sacrificed.

They are preserving some unpopular outgoings for idealogical reasons. It is one thing to give foreign aid when you are flush. It makes no sense to give away money you had to borrow on the market. Especially when you give it to a country with nuclear weapons, a space programme, a vast army and air force and a growing economy.

And my biggest gripe of all, where is the growth supposed to come from? Why is the regulatory load on our businesses not reduced? Why carbon taxes to shackle out industries? Why stupid employment laws which discourage jobs here in favour of exporting them?

TGF UKIP

Rhoda, as usual, is bang on. This is a LibDem government which doesn't believe that tax cuts have anything to do with promoting growth, that talks about deregulation without deregulating and claims to prioritise manufacturing while doing everything it possibly can to sabotage it with carbon tax penalties and huge energy price increases.

If you wish to claim any shred of crdibility as a commentator, Fraser, then it's high time Spectator Nelson got well and truly stuck into them. Or is the position at court to be maintained whatever the cost to your journalistic reputation?

John brown

Is it an upside down histograph

daniel maris

General Zod,

The apparent contradiction is resolved by my analysis - a huge amount of money is being spend on redundancy. That is disguising the true extent of the structural cuts, which are deep. However, stripping out the structure doesn't get us out of the immediate financial hole.

I maintain it would have been better to rely on natural wastage and a recruitment freeze to deliver steadily increasing but "cheap" cuts.

The Chancellor seems to me to have opted for the worst of all possible worlds: not reducing public expenditure that much but nevertheless managing to achieve
deep service cuts, whilst exacerbating the effects of inflation through an ill-timed public sector pay freeze. All in the context of a wild frenzy of bonus snaffling by the (mostly nationalised) banking sector! Hardly surprising we have zero growth (minus actually if you look at per capita growth, taking into account the 250,000 additional inhabitants allowed in under the government's mass immigration policy).

michael

As the east's insatiable appetite mops up its own production the hole caused by ever increasing lead times and steadily increasing prices, (chinese inflation ... a not unfamiliar 5%) leaves the door wide open for local manufacturing.
With the pound stabilising and the vat hike a one-off,(consequential downward pressure on inflation) by this time next year we ought to be looking at a pretty competitive future.

disenfranchised

@ michael.....
ought to be looking at a pretty competitive future?
this time next year we'll be millionaires, rodney. i'm ordering my ferrari first thing in the morning.....