Slapped down: Cameron rebuked for 'misleading' economy speech
The independent Office for Budget Responsibility (OBR) has issued a stern rebuke to David Cameron for misleading the public over the economy.
Robert Chote has written to Cameron after the prime minister yesterday claimed the OBR was "absolutely clear" that "the deficit reduction plan is not responsible" for Britain's struggling economy.
"For the avoidance of doubt, I think it is important to point out that every forecast published by the OBR since the June 2010 Budget has incorporated the widely held assumption that tax increases and spending cuts reduce economic growth in the short term," the OBR chairman wrote in his tersely-worded letter.
He said the spending cuts and tax hikes that make up the coalition's deficit reduction drive are calculated to cost Britain's economy around 1.4% of GDP.
Chote went further, suggesting the worse-than-expected performance of the UK economy might reflect the coalition's austerity drive having had a more severe impact than previously thought.
But, he pointed out, "we concluded from an examination of the subsequent outturn data that the impact of external inflation shocks, deteriorating export markets and financial sector and eurozone difficulties were more likely explanations".
That speculation appeared to have driven Cameron's claim in his West Yorkshire speech that Britain's struggling economic performance was due to external factors rather than the government's policies.
The prime minister had claimed: "As the independent Office for Budget Responsibility has made clear, growth has been depressed by the financial crisis, by the problems in the eurozone and by a 60% rise in oil prices between August 2010 and April 2011.
"They are absolutely clear, and they are absolutely independent. They are absolutely clear that the deficit reduction plan is not responsible; in fact, quite the opposite."
