Britain’s Tory-led government, which set out in 2010 to implement tougher austerity plans than its Labour predecessor, would be set to break Labour’s own fiscal constraints had it not repealed the law after taking power.
The Fiscal Responsibility Act of 2010, one of the final pieces of legislation passed by Gordon Brown’s government before it lost power, was intended to show that Labour was serious about deficit reduction. It required whoever was in power to cut the deficit as a percentage of gross domestic product in half by 2014 and ensure that debt was falling by 2016. Forecasts from the Office for Budget Responsibility this month showed the government on course to miss both targets.
While Conservative Chancellor of the Exchequer George Osborne repealed the act in 2011, his failure to meet even goals that he argued two years ago weren’t tough enough shows how hard cutting the deficit is turning out to be. Osborne’s plans were thrown off course by a double-dip recession that lasted into the first half of this year.
Labour Treasury spokeswoman Rachel Reeves accused Osborne in a statement yesterday of having “gambled that deeper and faster tax rises and spending cuts would secure the recovery and get the deficit down.” She said this plan was “choking off the recovery and pushing up long-term unemployment.”
The deficit was 11.1 percent of GDP in the year ending April 2010. The latest OBR forecast suggests it will be 6.1 percent in the year ending April 2014. It also says public- sector net debt will not fall as a percentage of GDP until the year ending April 2017, a year behind both Labour’s and Osborne’s targets.
“We inherited a terrible situation, made worse by the collapse of the euro zone,” Brooks Newmark, a Conservative lawmaker who sits on Parliament’s Treasury Committee, said in a telephone interview. “We’ll probably miss our targets, but the idea that Labour, who haven’t identified any spending cuts, would have done any better is laughable.”
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