George Osborne admitted yesterday that his plan for UK economic recovery could be blown out of the water unless European leaders come up with a solution to the eurozone sovereign debt crisis. "If the euro crisis deteriorates, if that leads to further deterioration in conditions in financial markets, that will have a significant impact on our economy," the Chancellor told the Treasury Select Committee.
Referring to the estimate from the Office for Budget Responsibility that the UK economy will grow by 0.7 per cent in 2012, Mr Osborne said: "There is a very significant downside risk to this forecast from the ongoing situation in the eurozone." Pressed to quantify the scale of the danger to the UK economy, the Chancellor refused to be drawn. "If I was to put a figure it would just be a guess," he said. "We don't know how that adverse outcome would play out." The Chancellor did reiterate, though, that the Treasury is engaged in contingency planning for a eurozone emergency. The National Institute of Economics and Social Research yesterday estimated that the British economy grew by an anaemic 0.3 per cent in the three months to November, down from 0.4 per cent in the three months to October.
The Chancellor came under fire from the Treasury committee's members for the fact that newspapers had been told much of the detail of what was going to be in last week's Autumn Statement before it was delivered to Parliament. Mr Osborne was asked directly by the chairman of the Treasury Select Committee, Andrew Tyrie, whether there was any pre-briefing ahead of the statement.
"We try to run a tight ship," Mr Osborne said. "The key fiscal judgments were kept to the statement, they were not pre-briefed. Parliament was told first." The chairman of the Office for Budget Responsibility, Robert Chote, revealed to the committee on Tuesday that the government's fiscal watchdog was not given the full details of Mr Osborne's £250bn National Infrastructure Plan while they were drawing up their forecasts.Reuse content