Rachel Reeves MP, Labour’s Shadow Chief Secretary to the Treasury, commenting on the Office for Budget Responsibility’s forecast evaluation report, said:
“The OBR’s report notes that, at the time of George Osborne’s first Budget, they forecast growth of 5.7 per cent between the start of 2010 and the second quarter of 2012. But this has turned out to be just 0.9 per cent over that period as, in the OBR’s words, a steady recovery faltered since mid-2010.
“As they look back at why things have turned out so badly it is significant that the OBR has said, for the first time, that the Government’s tax rises and spending cuts may have had a bigger negative impact on the economy than previously thought. This follows the IMF saying last week that they had significantly under-estimated fiscal multipliers in the last few years.
“Of course other factors like high inflation and the impact of the eurozone crisis have had an impact on economies around the world, including ours. But with no growth for two years and Britain just one of two G20 economies in a double-dip recession Ministers need to explain why we have done so much worse than other countries.
“Instead of pretending that everything is going to plan, the Chancellor needs to act now to kick-start our economy and start making up all the ground we have lost over the last two years.”<div>