Osborn fucks up as Britain loses triple A rating(53 Posts)
Osborne and Cameron said the triple A rating was the key test of their policies so now what? Any danger of them admitting they've got it badly wrong and screwed the economy?
Would be better getting John Swinney MSP, the Scottish finance minister to sort it out.
The Tories have refused to take any advice, Scottish Government warned them that's what would happen by making the choices they did.
I think not, my love. Dave'n'Gideon don't do I Got It Wrong, innit.
As far back as February 2010, he told an audience of Tory activists: "What investor is going to come to the UK when they fear a downgrade of our credit rating and a collapse of confidence?" In the Tory manifesto, published weeks later, he said: "We will safeguard Britain's credit rating with a credible plan to eliminate the bulk of the structural deficit over a parliament."
George Osborne under pressure as Britain loses AAA rating for first time
George Osborne: More Dangerous than a Credit Rating Downgrade
It was announced today that credit ratings agency Moodys has downgraded the UK governments credit worthiness from AAA to Aa1. This in the same week that Chancellor George Osborne was forced to admit that both the national debt and the deficit of the UK are up as borrowing this year is on the rise. Whatever damage done to UK fortunes by the credit downgrade, surely the greater peril lies in leaving this discredited chancellor in charge of the nations finances.
Budget 2012 Revisited
George Osborne laid out his economic strategy in last years Budget. However, in reviewing these plans less than one year on, it is not hard to see the Chancellor is a straw man clutching at straws.
The Office for Budget Responsibility is slightly revising up in their growth forecast for the UK this year to 0.8%
The UK economy shrank by 0.4% in 2012.
Today, I can report that the deficit is falling and is forecast to reach 7.6% next year.
The budget deficit grew in November 2012 by £1.2bn.
Borrowing this year is set to come in at £126 billion, £1 billion lower than I forecast in the autumn. Borrowing will then fall to £120 billion next year, if you exclude the transfer of Royal Mail pension assets.
Spending rose 6.3%. Borrowing this year is set to overshoot official targets by £7bn.
We are also passing on our low interest rates to small businesses, through the National Loan Guarantee Scheme. This started operation yesterday. Barclays, Lloyds, the RBS, Santander and the new business bank Aldermore are all involved.£20 billion of guarantees in total will be available.
The scheme received only 15% of estimated respondents and was ditched in favour of the Bank of Englands Funding for Lending Scheme.
So there will be no deficit funded giveaways today.
Despite shockingly bad economic performance the chancellor gave an income tax cut to the UKs top earners (costing £3bn a year) and a cut in Corporation Tax (costing £2.6bn over two years) in the Autumn Budget of 2012.
The Office for Budget Irresponsibility
Osborne has side stepped personal responsibility for dodgy forecasting by setting up the Office for Budget Responsibility. The OBR was sold as an independent forecaster of the public finances led by neo classical economist and founding member of the Bank of England Monetary Policy Alan Budd. The OBR is actually housed just off George Osbornes office in the Treasury and their performance has been tantamount to propaganda over the years of their operation, as the picture above demonstrates.
The OBR has received criticism from most quarters outside the government and its circle of friends. The New Economics Foundation claim the OBR simply predicts the future required to justify the Governments ideological position.
The replacement of Osbornes pal Alan Budd by his cooler relationship with former IFS chief Robert Chote in August 2012 has seen the OBR appear to challenge government more and present a gloomier picture of the outcomes of Austerity policy than Budds OBR has hitherto but perhaps it is too little too late.
A Case of Ideology over Evidence
Our first benchmark is to cut the deficit more quickly to safeguard Britains credit rating. I know that we are taking a political gamble to set this up as a measure of success. Protecting the credit rating will not be easy The pace of fiscal consolidation will be co-ordinated with monetary policy. And we will protect Britains credit rating and international reputation. George Osborne, 2 February 2010.
Osbornes chancellorship has been an unmitigated failure by his own measures. Surely, if he was a believer in evidence based policy, Osborne would be assessing what went wrong and creating new policy which generated the growth and the ratings that he purports to seek. Instead, his reaction to the news reads as follows:
Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it.
In most peoples lexicon, a recovery is best characterised by a situation getting better. How this government has the nerve to call this a recovery when the economy is worsening and weve lost our AAA credit rating for the first time since the 1970′s simply beggars belief. This is the economic equivalent of administering rat poison to a cancer sufferer, and as the patients situation worsens yelling See, I told you they were sick! We must keep administering my medicine!
This chancellors boots are cemented and the UK economy destined to sink with him, because of his ideological commitment to austerity.
Osborne talked in his 2012 budget of being forced to make difficult decisions but since when has it been a difficult decision for a conservative chancellor to roll back the welfare state, privatise public services and cut taxes on corporations and high earners? This is business as usual for a Tory chancellor. Osborne is following the same plan he would always have followed, deficit or no deficit. The fact is this government has exercised fingers crossed economics, hoping that growth would naturally return as the markets settled and using the 2008 financial crisis as a fall guy for their ideological cuts. Instead, their policies have exacerbated the situation.
Georgie Boy, Its Time to Go
It is almost pointless to call for Osbornes removal by Prime Minister David Cameron, as like so many other stooges in this government they are following the path set for them. They are indeed, all in this together. But nonetheless, it does make sense to cry foul more generally and raise the pressure to unmanageable levels anyway. The truth is, this chancellor is eviscerating the UK economy along with its welfare state at a pace which would have made even Margaret Thatchers head spin. The man is an oaf, an ideologue and a menace to Britain at large. Georgie Boy, its time to go.
Surely all caring sensible people would have known these 2 would have fucked it up between them in 2010.
Thanks Ttosca for your input
This is more of a political problem than an economic problem.
Economically speaking the markets have factored the loss in some time ago. Even Ed Balls said "Economically, the credit rating decision itself makes no difference at all."
The only real problem is that Osbourne has painted himself into a corner by so cherishing the AAA status. Now we've lost it, he's handed the opposition a big fat stick to beat him with.
In the real world though timing is everything. And thankfully for us, there are hardly any AAA countries left so it doesn't look so bad. Markets would have reacted much worse two years ago. But given that France and the US have also lost it. And Germany is really the only major EU economy remaining with it, it's no longer a big thing.
I do think the Tories (in fact all parties) probably underestimated the scale of the problems facing the economy. Anyone thinking a few nip/tucks to policies and the economy would grow was sorely deluded.
The real question out of this is if you think Osbourne is bad, do you honestly think Balls would do better?
It was Osborne who made such a big deal of the AAA rating in the first place, and who said it would be the judge of his policies.
I think almost anyone would have done a better job than Osbourne. The UK is performing worse than most of the EU:
The UK has one of the slowest economic growth rates of all the G20 countries, new figures revealed yesterday, as George Osborne met finance ministers in Moscow.
And countries which have not pursued policies of economic bloodletting, like the US, have performed the best.
US economic growth rate revised up to 2.7%
The revised data confirmed that a 9.5% jump in spending by the federal government during the quarter - compared with a 0.2% decline the previous quarter - played an important role in the pick-up in growth.
So yes, Osborne, who has caused the UK to lose AAA status, who is likely to bring the UK in to an unprecedented triple-dip recession, and who is causing a massive increase in poverty in the UK is an utter fucking disaster and my dog would have been a better chancellor then him.
agree with ttosca - Osborne has been an unqualified disaster.
The UK also had one of the largest deficits to try to tame so it's really no wonder we're struggling. The thing is this is a long term problem to fix and we have to take the odd blip in context.
As for the US I am convinced their time will come. All they've done is kick the can down the road repeatedly. Time and time again they've not addressed their problems because of the political paralysis over the pond.
The time will come when the markets will force the US to make significant cuts. Only problem is that because of the size of the US market, the rest of us will be affected too.
Who would you realistically rather be chancellor?
I don't dispute that this is an embarrassment to the chancellor, but important to note that the commentary from Moody's was broadly supportive of the UK's austerity measures. The main reasons given for the downgrade were that that the government's efforts are being hampered by a 'weaker macroeconomic environment than expected' and a 'high chance of further shocks within the currency union'.
What a joke. There is no possible evidence that could sway the austerity ideologues that Osbourne's anti-Keynesian bloodletting is harming the economy.
I don't even think he's as foolish as his followers. For him, I think he thinks he has no other choice but to continue to destroy the economy and people's lives because to admit that he got it wrong would be too painful, would make him admit to himself and the country that he's a fool, and would effectively end his career as a politician.
The country is paying the price for this.
I was impressed that GO used this as an opportunity to say that Moody's downgrade was a clear and ringing endorsement of his spending cutting and benefit cutting measures, and they were indicating that he was doing everything absolutely right and should proceed with "Plan A Let's shaft pretty much everyone" with no qualms.
Uh Huh Righto then.
Moody's have put the UK on a 'stable outlook' : 'this reflects Moody's expectation that a combination of political will and medium-term fundamental underlying economic strengths will, in time, allow the government to implement its fiscal consolidation plan and reverse the UK's debt trajectory."
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Yeah, keep on cheerleading for your team. That's what's most important here.
Rhiannon86 at least a Labour Government may not have been feathering their own nests at the expense of the vulnerable.
Nothing changes on here I see, all the Tory apologists (yes you NG2) making excuses for the government screwing up the economy, the tripleAAA rating was the holy grail but now its gone all of a sudden it no longer really matters, yeah right.
Anyone with any sense knew the Tories would screw up and I take considerable pleasure in saying "I told you so"
Economists have been advising a change in policy for over two years.
We're borrowing more. Austerity is failing.
Of course its not working it was never going to.
The Tories knew they would probably be a one term government as from the start they were determined to rule for the benefit of the rich and powerful, to destroy as much of the welfare society ad they could and to privatise the NHS.
The nasty party was always there under the rhetoric.
You can certainly make an argument that austerity isn't working, but you can't really say that Moody's said that it isn't working, because they didn't.
And the same old left wingers who are quick to criticise whilst offering solutions which if in a library book would be placed firmly in the 'fiction' aisle.
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