It’s the Conservative Government’s biggest U-turn yet – and to This Writer, it appears to have been planned.
Remember the Autumn Statement, in which George Osborne struck such a triumphant tone because the Office of Budgetary Irresponsibility had magicked up £27 billion of extra money for him in a prediction over the next five years.
Only three months later, two-thirds of that cash has been magicked away by the same organisation and suddenly Osborne is saying that he may not be able to deliver a budget surplus by 2020 after all.
Not only that, but the downturn means he may be unable to relax austerity in the last two years of the current Parliament, as the Conservatives promised us all in the run-up to the general election last May.
Suddenly the promise has gone from “happy days in a couple of years’ time” to “more cuts, more austerity, more pain”.
And it’ll be the poor who have to pay for it, of course.
But isn’t this what the Conservatives wanted all along?
They hoodwinked us all with some pretty figures that forecast better times, but the plan has always been to keep cutting until the NHS has been privatised, the welfare state destroyed, and everything else but the courts and defence have been sold off – not even to the highest bidder but to Conservative Party donors.
David Cameron said as much in a Telegraph interview, all the way back in 2011 or thereabouts.
Osborne is seeing it through.
George Osborne has warned he may have to impose bigger than expected cuts to public spending towards the end of the current parliament as the “storm clouds” in the global economy hit economic growth.
In a move to prepare the ground for a sharp deterioration in the public finances in the budget next month, the chancellor said the recent fall in nominal GDP numbers showed the British economy was smaller than expected.
Osborne, who signalled that the cuts would come from efficiencies in government spending, also indicated that he might adopt a flexible approach to his target of delivering an overall budget surplus of £10.1bn by 2019-20.
The chancellor made clear that he might have to embark on a change of course in his budget on 16 March when he warned of global “storm clouds” in an interview with the BBC at a meeting of G20 finance ministers in Shanghai.
John McDonnell, the shadow chancellor, said: “This is a total humiliation for floundering George Osborne. He has sneaked off to China to admit what Labour have been saying for months, that his recovery is built on sand. Far from paying our way, Osborne’s short-term economics means Britain is deeper and deeper in hock to the rest of the world.”
The chancellor spoke out after the latest nominal GDP numbers released by the Office for National Statistics showed that the cash size of the economy was 1% smaller than previously assessed. That represents a fall of £18bn.
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