Posted on 06/29/2009 4:17:18 PM PDT by bruinbirdman
The Organisation for Economic Co-operation and Development has waded into the pre-election war of words over the public finances, urging the Government to impose sweeping spending cuts.
In its annual survey of the British economy, the Paris-based institution told the Government to slash the size of its deficit far more than it currently intends or face major problems in the coming years. It came as the Bank for International Settlements (BIS) warned that cutting the record deficits caused by the crisis will be "the main task of policymakers for years to come".
The OECD said that Britain's deficit would climb to 90pc of economic output – significantly higher than the 80pc level the Treasury projected in the Budget. In order to keep the UK economy in good health, it added, the Government should target "more ambitious" budget cut-backs once the recession is over.
Significantly, the OECD advised focusing on spending cuts rather than trying to raise tax any further, saying: "Experience in other countries suggests that a focus on expenditure cuts, rather than revenue raising, is associated with more successful consolidations, particularly when coupled with explicit expenditure rules."
The statement is significant, since it is becoming increasingly clear that the next election will be fought over public spending, with the Labour party already attacking the Conservatives for what it claims are excessive cuts in Government spending.
It came amid speculation that the Government has postponed the expected Spending Review this year, with Shadow Chancellor George Osborne speculating that this was intended to avoid spelling out inevitable post-election cuts.
He said: "This morning, Peter Mandelson and Alistair Darling could not even agree on whether there will be a spending review.
"Now, at lunchtime, the OECD says the Government has got to be more 'ambitious' and more 'explicit' about the need for
(Excerpt) Read more at telegraph.co.uk ...
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