Responding to Darling’s speech on Monday , Osborne said the PBR promises amounted to a doubling of national debt over five years to £1trn and said it was the biggest amount of borrowing ever undertaken by a British Government.
He said this year’s borrowing of £78bn was nearly double what the Chancellor forecast eight months ago.
Osborne blasted the 0.5 per cent increase in Nat- ional Insurance contribution rates from April 2011, arguing that Darling’s temporary £20bn giveaway was to be followed by £40bn of permanently higher taxes.
He said Darling’s plans were not just a tax bombshell but a “precision-guided missile aimed at the heart of the recovery”, accusing the Chancellor of basing his Budget on the political rather than the economic cycle.
Osborne challenged the Chancellor’s growth predictions, which he called “vastly more optimistic than most independent forecasters”.
Darling forecast that GDP growth would be 0.75 per cent this year, dropping to between -0.75 and -1.25 per cent during 2009 and then rising to 1.5-2 per cent in 2010. He quoted the International Monetary Fund’s projection that the economies of the US, Germany, Japan, France and Italy would all contract next year.
Osborne also quoted IMF forecasts to point out that the UK is set to face a worse recession than the same list of countries. He said the Chancellor’s move to cut VAT would not stimulate the economy.
Liberal Democrat Shadow Chancellor Vince Cable shared the Conservatives’ view that the VAT cut was not enough to boost the econ-omy, arguing that a “serious” and permanent cut to income tax for low-earners would be more beneficial.
Cable said: “The new 45p income tax rate is nothing more than a fig leaf to cover a £5bn tax hike which will hit millions of low-earners and businesses.”
Darling said: “You could choose to let the recession take its course, let families go to the wall but that is not an action plan.”