New Times,
New Thinking.

  1. Business
  2. Economics
6 December 2012

OBR head rebukes Osborne: the UK was never at risk of bankruptcy

Office for Budget Responsibility chief Robert Chote dismisses the "danger of insolvency".

By George Eaton

In the weeks after he took office, George Osborne justified his austerity programme by claiming that Britain was on “the brink of bankruptcy”. He told the Conservative conference in October 2010: “The good news is that we are in government after 13 years of a disastrous Labour administration that brought our country to the brink of bankruptcy.”

It was, of course, nonsense. With its own currency, its own monetary policy and the ability to borrow at historically low rates, the UK was never at risk of bankruptcy. In extremis, the Bank of England could simply buy up government debt (as it has done through its quantitative easing programme).

So it was pleasing to see the head of the Office for Budget Responsibility (OBR), Robert Chote, state as much on last night’s edition of Newsnight. He told Jeremy Paxman (from 15:17):

In terms of thinking about whether the government’s finances are sustainable, a key difference [between the UK and the eurozone] is that we are in a position where we have our own currency and in that sense we have a greater degree of flexibility that means the notion of the danger of insolvency is a much different question for us.

Having established the OBR to act as a check on the government (something for which Osborne deserves praise), the Chancellor might want to listen to its head and finally concede that there was no basis for his claim in 2010.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Content from our partners
The Circular Economy: Green growth, jobs and resilience
Water security: is it a government priority?
Defend, deter, protect: the critical capabilities we rely on