Ahead Of Feared GPD Figures Osborne Claims He Has Been 'Vindicated'

Ahead Of Feared GPD Figures Osborne Claims He Has Been 'Vindicated'

Chancellor George Osborne has insisted that his deficit reduction plan has been "vindicated" despite fears official figures out on Tuesday will show that the UK economy has flat-lined.

While Osborne said that the decisions he had taken may not have made him popular, he said they had turned Britain into a "safe harbour from the storm".

Low interest rates have "provided the stability that the British economy needs in a very, very unstable global environment," he said.

The Office for National Statistics will publish its latest growth figures on the economy for the three months to June. City economists are pessimistic, with most predicting growth of little more than 0.1 per cent.

Those figures may increase pressure on the government to find a 'plan B' after aggressive spending cuts put in place since last year's general election have failed to inspire consumer confidence.

However, Prime Minister David Cameron has played down hopes for another economic stimulus. Asked about tax cuts and quantitative easing, Cameron said: "There's no country, really, that can afford another fiscal stimulus. They've all run out of money."

"There isn't some great monetary stimulus you can give when interest rates are as low as they are. The right step for an economy like ours is to get on top of your debt and your deficit and then make it a better place for businesses to grow and expand and employ people."

Ahead of tomorrow's figures opposition politicians have said Osborne should cut VAT to stimulate the economy.

Shadow chancellor Ed Balls said Osborne was leading the country into a "Greek-style" trap by aggressively cutting public spending, and said that without "people in work paying taxes" it would be hard to get the economy growing.

Angela Eagle MP, Labour's shadow chief secretary to the Treasury, said in advance of the figures: "George Osborne is trying to get his excuses in early, but they will not wash with the British public. Every other major economy in the world has faced challenges like high world oil prices - and many had severe snow last winter too - yet their economic recoveries have continued while Britain has not grown at all over the last six months."

"Of course we've got to get the deficit down, but it can't be done in a sustainable way without strong growth and jobs. It's time George Osborne realised that."

Some observers said that while the economy was not in recession, it "might as well be".

Nick Pearce, director of the Institute For Public Policy Research, said before the release of the figures: "The UK economy might as well still be in recession, even if technically it isn't. Outside of London, in articular, the recession continues to be felt. Borrowing is also likely to rise because of weak growth and lower tax receipts. It is time for the Chancellor to seriously consider a Plan B for deficit reduction that puts growth and jobs first."

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