By a Newsnet reporter
Commenting on George Osborne’s claim that the eurozone crisis is “killing off” economic recovery, the SNP has said that the Chancellor should stop making excuses for his double dip recession and change course by releasing the capital spending for Scotland’s shovel ready projects.
Writing in the Sunday Telegraph newspaper, the Chancellor wrote “our recovery – already facing powerful headwinds from high oil prices and the debt burden left behind by the boom years – is being killed off by the crisis on our doorstep.”
However critics immediately pointed out that there are few if any signs of an economic recovery in the UK for the eurozone crisis to kill off. Opposition parties allege that the Conservative Chancellor is hiding behind the crisis in the eurozone in order to mask the failure of his own economic strategy.
Figures published in May revealed that the recession in the UK economy was far worse than originally feared. Between January and March this year, gross domestic product shrank by 0.3%, worse than the previous estimate of 0.2%.
The revised figures were published just one week after Christine Lagarde, head of the International Monetary Fund, said that the Chancellor should consider a new tactic in order to boost the economy, and increase focus of public investment in infrastructure projects.
Ms Lagarde’s call echoed those of the SNP and others, who for months have called on the Chancellor to adopt a “plan MacB”, and to increase public expenditure in key areas as a means of promoting economic growth.
However it is believed that Mr Osborne is determined to press ahead with his austerity and cuts plan. The UK government has refused to release some £300 million of funding due to Scotland for infrastructure projects.
Responding to Mr Osborne’s article in the Sunday Telegraph, Labour’s shadow chancellor Ed Balls, who was a minister in the Treasury under the previous Labour government and a close ally of Gordon Brown during the period of banking deregulation which many believe was the root cause of the current crisis, attacked Mr Osborne, calling him “out of touch” and “complacent”.
Mr Balls noted: “Despite the eurozone crisis, Germany, France and the euro area as a whole have so far avoided recession while Britain’s recovery was choked off in the autumn of 2010.”
The Chancellor was also criticised by members of his own party. Conservative MP Douglas Carswell said that an “absence” of domestic economic reform was the cause of “awful economic performance”.
Writing in his blog, Mr Carswell accused the Chancellor of “Gordon Brown era Whitehall thinking”, and said:
“The idea that it is all the fault of the eurozone is demonstrably wrong.”
He added: “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.”
Mr Carswell’s criticisms of his own government led Labour’s shadow Treasury minister Chris Leslie to comment: “When even the government’s own backbenchers think George Osborne has got it wrong on the economy it is time he finally listened and changed course.”
SNP Treasury Spokesperson Stewart Hosie MP, who has consistently argued for greater investment in infrastructure in order to boost growth, said that the Chancellor was using the eurozone crisis as an excuse for his own failure, and added that it was now clear that it was time for a complete economic rethink by the UK government.
He called on the UK government to release funding for 30 ‘shovel ready’ projects identified by the Scottish government as key projects to kick start the economy.
Mr Hosie said:
“The eurozone crisis is a challenge for us all and not an excuse for George Osborne’s economic failures which have been so graphically exposed by his omnishambles budget.
“Instead of fiddling with the fraying edges of his flawed budget and trying to dodge blame, it’s time for a complete rethink by the Chancellor.
“To kick-start the economy, we need more than excuses – we need action to boost growth and create jobs. This includes investment in the Scottish government’s 30 ‘shovel-ready’ projects across Scotland.
“We also need action on the high cost of fuel which is hammering businesses and families across the UK. The Chancellor should get behind the cross-party campaign led by the SNP and scrap the 3 pence fuel duty hike planned for August.
“With the economy in double-dip recession, the Coalition have run out of excuses as well as ideas. It’s time for a u-turn on the austerity agenda, action for jobs, and investment in ‘shovel-ready’ projects to get the economy growing again.”