Leading article: Not much economic wriggle room

The shadow Chancellor claims that Moody's decision to place Britain's triple-A credit rating on "negative outlook" proves that the Government is cutting too far, too fast. Meanwhile, George Osborne insists that the agency's warning shot – suggesting a one-in-three chance of a downgrade to come – is a "reality check" that reinforces his commitment to cutting national debt.

With so much political capital tied up in their economic differences, it is little surprise that both parties are trying to make what they can of Moody's. Leaving aside the political posturing, however, and what is left is strikingly little room for manoeuvre.

In fairness, Ed Balls is half right: the rating agency is, indeed, concerned at Britain's lack of growth. But Moody's also makes clear that extra borrowing is no solution and that waning political commitment to debt reduction would be an even graver concern.

Whether or not rating agencies deserve their power, the reality of a downgrade is still to hike the cost of debt. That being so, the Government is right to take the threat seriously. The Chancellor certainly must do more to boost growth. But he must do it without recourse to the markets. For investors, consistency is all. Notwithstanding this newspaper's initial reservations at Mr Osborne's cuts, with the plan in place, the price for wavering is higher than that of continuity.

In fact, the most recent economic indicators are not all gloomy. On Monday, the CBI forecast a return to growth this year, and inflation is inching downwards at last, as expected. Add in the possibility of a deal over Greek debt (which would stave off a catastrophic default, at least in the short term) and Britain's double dip is not quite a racing certainty.

But avoiding recession is not enough by itself. Perhaps a greater challenge for the Chancellor – and one far more toxic than the arcana of credit ratings – comes with this morning's unemployment statistics. The outlook is grim. Joblessness is at more than 2.5 million already and set to keep rising, with young people hit worst. Mr Osborne's efforts at fiscal stability deserve recognition. Preventing a generation being lost to unemployment can be no less a priority.

Independent Comment
blog comments powered by Disqus
Career Services

Day In a Page

'I may be deaf, but you can still talk to me'

'I may be deaf, but you can still talk to me'

Being a teenager is hard enough – for those with hearing loss, it can be even more complicated
A right royal trip down the river

A right royal trip down the river

A new exhibition celebrates the glory days of London's mighty Thames
The 10 Best lawn mowers

The 10 Best lawn mowers

From petrol-fuelled to self-propelled
Every second counts

Why does life appear to speed up as we get older?

Matilda Battersby finds out how the clock plays tricks with our minds
Couture on the Croisette: Fashion hits

Couture on the Croisette

The best outfits from the 2012 Cannes Film Festival
Child of the revolution: the Burmese family that democracy brought back together

Home of the free

The Burmese family that democracy brought back together
Cannes review: Canine accolade and Hitler's return are high spots amid the gloom

Cannes review

Frocks, canine accolade and Hitler's return
Robert Fisk: The going price of getting away with murder... would $33m be enough?

The going price of getting away with murder

Robert Fisk: The long view
Principled Skinner rises above the fray

Principled Skinner rises above the fray

Andy McSmith meets Dennis Skinner
Patrick Cockburn: I fear this terrible massacre will be the beginning of a long civil war in Syria

Patrick Cockburn

I fear this terrible massacre will be the beginning of a long civil war in Syria
Hardeep Singh Kohli: For me, it is all about 'Gregory's Girl', a record of first love

Hardeep Singh Kohli

For me, it is all about 'Gregory's Girl', a record of first love
Christian Louboutin: 'I don't think comfort equals happiness'

Christian Louboutin interview

'I don't think comfort equals happiness'
Happy birthday, Hotel Babylon!

Happy birthday, Hotel Babylon!

Hollywood's home to the A-list celebrates 100 years of discreet luxury
Rupert Cornwell: Low-rise capital could finally reach for the sky

Rupert Cornwell: Out of America

Low-rise capital could finally reach for the sky
The secret life of the red carpet

The secret life of the red carpet

As Cannes reaches its climax with the Palme d'Or and the celebrities gather in London for the Baftas tonight, Kate Youde and Jack Dean investigate the real star of the show