Stop overdoing the economic gloom, Boris tells Coalition
BORIS Johnson launched an outspoken attack yesterday on David Cameron and George Osborne’s handling of the economy – demanding action to boost public confidence and growth. The London Mayor criticised the Prime Minister’s prediction that Britain will be saddled with austerity for eight more years, warning: ‘There’s a danger of overdoing the gloom.’
And he said the Chancellor needs to show more ‘political will’ to get foreign investors to fund infrastructure projects in the UK. Mr Johnson also demanded more reforms, advocated by Tory MPs, to make it easier to hire and fire staff.
And he said the Government must act now to plan a new hub airport after ministers kicked plans for a third runway at Heathrow into the long grass. The Mayor spoke out after economists predicted that figures this week will show the economy has shrunk for the third successive quarter.
He told the BBC’s Andrew Marr Show: ‘The most important thing is for the economy to get back to growth and for confidence to return. What I worry about is that people are losing confidence, losing energy, losing enthusiasm.’
Asked about Mr Cameron’s claim last week that spending cuts would continue until 2020, Mr Johnson added: ‘Of course there’s a danger of overdoing the gloom. I don’t think there’s any reason at all why it should go on for another eight years.’
The Chancellor last week announced plans for £51billion of infrastructure spending but Mr Johnson made clear he does not think it goes far enough.
‘I would like to see a very aggressive campaign for more infrastructure investment,’ he said. ‘ There are… sovereign wealth funds around the world who are only too happy to come and invest in this country. What it needs is the political will to get on and do those projects.’
Mr Johnson is widely seen as a future leadership rival to Mr Osborne and his words come while the Chancellor is already at a low ebb.
Growth figures for the period between April and June, published on Wednesday, are expected to show that the double-dip recession has per-
‘We are tired of indecision’
sisted. Philip Shaw, an economist at brokers Investec, forecast a further slump in output of around 0.4 per cent.
Tory MPs are questioning whether Mr Osborne should remain Chancellor. A ComRes poll yesterday found that 44 per cent of voters want him removed in the next reshuffle, with only 20 per cent saying No. To make matters worse, John Longworth, directorgeneral of the British Chambers of Commerce, accused ministers of failing to take the ‘sustained, long-term action’ needed to boost growth.
In a newspaper article, he wrote: ‘Politicians seem to believe that businesses must be willing and ready to “strain every sinew”, without doing the same themselves. Businesses are tired of indecision and equivocation.’
Meanwhile, a left of centre think-tank says today that the Chancellor’s economic strategy is deterring businesses and consumers from spending.
The Institute for Public Policy Research says the sluggish recovery from recession will see the UK’s long-term growth rate reach only 1.7 per cent a year by 2015 – its lowest level since the Second World War. That will cause the equivalent of £165billion in lost output over 15 years, it says. Britain’s historic average is 2.4 per cent.
Culture Secretary Jeremy Hunt rode to Mr Osborne’s rescue. ‘You don’t become chancellor because you want to be Mr Popular,’ he said. ‘The job of chancellor is to take really tough decisions that have their payback many years hence.
‘George Osborne has been one of the bravest chancellors in history, putting through a package of spending cuts and as a result he has kept Britain out of the firestorm that has engulfed the eurozone.’
Economists have warned of the unreliability of growth figures from the Office for National Statistics. Initial estimates of GDP are often revised in the light of later data.
Howard Archer, of forecaster IHS Global Insight, predicts this week’s GDP figures will show a contraction of 0.3 per cent in the second quarter.
But this will be based only on the production side of the economy and so could be revised upwards once other areas are factored in by the ONS later, he says.