BRITISH CHANCELLOR of the exchequer George Osborne’s economic strategy is facing questions following figures that show he will not be able to meet growth targets this year, unless the British economy accelerates.
The UK economy grew by 0.2 per cent in the last three months, significantly below the 0.5 per cent result achieved between January and March, though the Office of National Statistics figures will be reviewed twice more before they are finalised.
Nevertheless, analysts warn the UK may grow by just 1.2 per cent this year, rather than the 1.7 per cent predicted by the Office of Budget Responsibility, raising dangers its AAA debt rating could come under pressure.
Explaining the figure, the Office of National Statistics said the bank holiday called for the wedding of Prince William and Kate Middleton had lowered output, though it, along with good weather in April, boosted hotel and restaurant trade by 2.2 per cent.
Manufacturing industries were affected by the Japanese tsunami and earthquake. Construction and service industries grew by 0.5 per cent, though electricity and gas sales fell by 3.2 per cent, again due to April’s weather.
Meanwhile, the chancellor moved to reject as “complete nonsense” claims divisions have emerged between him and prime minister David Cameron, following reports No 10 had “read the riot act” to the Treasury.
“I think that’s nonsense. David Cameron and I work more closely together than I think any prime minister or chancellor in history. I know we got used to over the last 10-15 years chancellors and prime ministers arguing with each other, Gordon Brown and Tony Blair having endless fights.
“Actually David Cameron and I work hand in glove together. We have a growth plan. The growth plan is reducing business taxes, freeing up businesses to grow and expand, cutting red tape, reforming education and welfare,” Mr Osborne said.
On the BBC, Labour’s Ed Balls demanded that Mr Osborne change course.
The UK economy has grown by 0.7 per cent over the past 12 months after one of the sharpest recessions of the last 100 years, and the 1.2 per cent performance for 2011 compares with forecasts of 2.5 per cent for the US, 3.4 per cent for Germany and 2 per cent for France.
In another blow for the government, an ITV/ComRes opinion poll last night reported 56 per cent of those polled are more worried about their finances than three months ago.
Furthermore, nearly two-thirds of the British public (62 per cent) are worried about the state of the UK economy – a sharp rise from 52 per cent in June and an increase of 20 percentage points on October 2010.
Meanwhile, the Institute for Fiscal Studies reported that poorer households are facing higher real inflation than richer ones. This is because they are more affected by rising food and utilities charges, while the better-off benefit from low mortgage charges.
