My Column

sumthing does not add up with Georges Plan A

  • Date: Monday 4th March 2013
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George Osborne attempted to play down the impact of the UK's loss of its AAA credit rating and said he would redouble efforts to cut the deficit.

I was interested to read that in spite of the humiliating downgrade decision by the rating agency Moody's, the Chancellor said he would not be swayed from the coalition Government's economic Plan A.

Despite warnings that Osborne’s austerity policies would prove self-defeating, the Chancellor remains stubbornly convinced that this is the way forward.

Critics say the UK economy will struggle to grow for years, but that doesn’t seem to bother a defiant Osborne.

How can we maintain confidence in Osborne’s recovery drive when experts are predicting the pound will slide against the US dollar and the euro as global markets lose out?

Essentially a downgrade threatens to increase the cost of borrowing money on international markets, and it is a big concern for Britain because the Government is still borrowing £110 billion a year to meet spending commitments.

What really angers me is the fact that hard-working low-income families are the ones who will really bear the brunt of the UK losing its AAA rating.

This downgrade could push mortgage bills up by as much as £5,000 a year because of higher borrowing costs feeding into the prices banks pay.

All this is doing nothing to help the Chancellor’s reputation. Let’s face it; he hasn’t exactly been Mr Popular of late, has he?

Remember when, back in September, he was booed by thousands of spectators at the Olympic Stadium while waiting to take part in a Paralympics medal ceremony?

That was the first sign of how out of touch he actually is.

The Chancellor laughed off the crowd's reaction as he handed out medals - but I bet he was cringing.

I wasn’t surprised by this reaction from a crowd largely made up of people affected by the government's changes to vital disability benefits.

Given the strength of feeling about the economy and cuts in services for disabled people, this was to be expected.

However, it seems to me that it’s either his way or the highway as the man in charge of the UK’s finances continues to ignore the everyday man, whilst refusing to back down on austerity measures.

Some say the loss of Britain’s AAA rating should be an alarm bell that awakens the Chancellor to possibility that his plan of deeper-and-deeper cuts is not the answer to our outrageous deficit problems.

I think they are right to be worried, as the weakening of the pound will hit the man on the street in the pocket again.

It will make imports more expensive, and families can probably expect household costs to rise – as if things aren’t tough enough without gas, electricity, petrol, and travel costs continuing to hike up.

On the other hand, the UK Government’s Business Secretary Vince Cable thinks the ratings fiasco is “largely symbolic” and is rather more relaxed about it.

He’s been reported as saying that the attempts to reduce our deficit, while slow, are still working.

He has used the US and France as examples of countries that have survived ratings cuts, so he reckons we can too.

I hope he’s right, but I’ll admit I’m nervous.

Recent reports quoted Osborne as saying his main aim this year was to avoid “f***ing up” the budget – those aren’t exactly reassuring words if you ask me.

Let’s just hope he manages it and we aren’t on the path to recession number three.


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