Leading article: Not much economic wriggle room

Share
Related Topics

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.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

IT Support Technician (2nd Line / Server Support) - Bedford

£24000 - £26000 per annum + Benefits: Ashdown Group: 2nd line IT Support Techn...

Teacher

£100 - £130 per day: Randstad Education Chelmsford: Would you like to have a b...

Year 3 Teacher

£100 - £130 per day: Randstad Education Chelmsford: KS2 TeacherWould you like ...

Science Teacher

£100 - £140 per day: Randstad Education Preston: Are you a qualified science t...

Day In a Page

Read Next
 

Daily catch-up: Ed Miliband on low pay; Alan Johnson on Betjeman; Tom Freeman on editing

John Rentoul
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments