Labour is apparently thrilled with the OECD’s assessment of the UK economy, released today. The think tank cut its growth forecasts from 0.9 per cent to 0.8 for 2013 and from 1.6 per cent to 1.5 per cent for 2014, while warning of ‘strong headwinds’ from the eurozone. So Chris Leslie, the Shadow Financial Secretary to the Treasury seized on the report, saying:
‘The OECD has once again cut its growth forecasts for the UK economy, warning that youth unemployment is too high and that weak growth means wages are not keeping up with price rises.’
His colleague Rachel Reeves said it was ‘time for the government to listen and act on growth’.
If you’re the sort of person who gets their news from Labour press releases, you might be dancing around your sitting room shouting ‘Plan A isn’t working!’ and waving a red flag in triumph. But the OECD report doesn’t say austerity has failed. In fact, it argues for more cuts:
‘With high budget deficit and gross government debt rising to 90% of GDP in 2012, further fiscal consolidation is necessary to restore the sustainability of public finances. The authorities’ medium-term underlying fiscal consolidation plans, together with the use of the automatic stabilisers, should help combine sustained consolidation with necessary flexibility to meet unexpected output shocks.’
There’s no ‘too far, too fast’ in that assessment.
But like almost every other organisation, the OECD criticises the Help to Buy which is fast becoming the billy-no-mates of policies. It says that ‘without a sufficient supply response, some measures could create upward pressure on house prices’.
The big challenge for Labour – as well as wording press releases that suggest international think tanks agree that Plan A has failed when they are in fact calling for a more robust implementation of Plan A – is how it responds to the spending review in just under a month’s time. The Tories are already on the Opposition’s case on this, and it is clear that no matter how much grief he experiences in negotiations with Secretaries of State, George Osborne will use the final announcement as a weapon against Labour.
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