Tory backbenchers have attacked Chancellor George Osborne’s economic policy and rejected his claims that problems in Europe are “killing” economic recovery in the UK.
Writing in the Sunday Telegraph, Osborne said recovery in the UK is already struggling because of high oil prices and debt “left behind by the boom years”, adding that it is being “killed off” by the European crisis. The UK is in official recession after GDP shrank in the last two quarters.
Conservatives, including and Treasury select committee member David Ruffley, former tax adviser to Osborne Lord Forsyth of Drumlean and MP Douglas Carswell have hit back at the claim.
In an interview with the Daily Telegraph, Ruffley says the UK’s economic problems cannot simply be blamed on Europe and that “radical action” is needed to attract money from rich countries while more small business regulation should be scrapped.
He says: “Of course eurozone meltdown is damaging business confidence but this must not be used as an alibi for no growth in the UK. We cannot just say the eurozone is destroying confidence in the UK and nothing can be done.”
Writing on his blog, Conservative MP for Clacton points out that Switzerland, which does four times more trade with Europe than the UK, grew by 2 per cent year-on-year in the first quarter of 2012. He slams the “economic three card trick” of quantitative easing for keeping borrowing costs to the Government artificially low, allowing the Chancellor to “go on about the UK’s ‘safe haven’ status”.
He says: “It is not the eurozone crisis that we should blame for our awful economic performance, but the almost total absence of domestic economic reform, coupled with the Treasury’s absurd belief that monetary stimulus can engineer growth.”
Lord Forsyth also says more needs to be done to boost growth, for example scrapping the planned 3p increase in fuel tax due to come in later this year.
He says: “Of course market conditions are difficult but I think George really needs to address urgently are the tax burden.”
Osborne will give his Mansion House speech on Thursday where he is expected to set out plans for structural reform of banks based on the recommendations of the Independent Commission on Banking.