Response to Ben Bernanke’s speech at Jackson Hole

First the head of the IMF and now the head of the US Federal Reserve have warned against reckless fiscal austerity putting growth, jobs and deficit reduction at risk.

Only last week Christine Lagarde the Managing Director of the IMF said ’slamming on the brakes too quickly will hurt the recovery and worsen job prospects’.

Now Ben Bernanke has warned that policy makers need to be ‘attentive to the implications of fiscal choices for the recovery in the near term’, in order to avoid ‘the creation of fiscal headwinds for the current recovery’.

It is time George Osborne got out of denial and started looking at what his economic policy has done to growth and jobs here in Britain.

Today’s figures confirm that compared to the Eurozone which grew by 1.3% and the US which has grown 0.9% since the autumn the UK economy has been almost flat at just 0.2%. And unemployment is up 38,000 in the last three months alone. As a result the deficit will be harder to get down, with the Office for Budget Responsibility already estimating that the Government will need to borrow £46bn more over the rest of the parliament than previously thought.

We need a tough, medium-term plan to get our deficit down, but the Chancellor’s reckless policies of cutting too far and too fast have ripped out the foundations of the house and left our economy deeply exposed to the brewing global hurricane.

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Posted August 26th, 2011 by Ed