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UK in recession: Where is Osborne's Plan B?

Government's strategy for recovery under fire as UK returns to recession

Ben Chu
Thursday 26 April 2012 11:25 BST
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Pressure is mounting on the Coalition to reverse course on its strategy of spending cuts after the British economy officially slumped back into recession in the first three months of this year. Economists warned that George Osborne's plan for deficit reduction will damage any recovery over the coming years, with 90 per cent of the Chancellor's planned cuts still to be enacted.

There were signs yesterday that the Coalition's united stance on spending cuts was wavering. The former Liberal Democrat Treasury spokesman, Lord Oakeshott, who is close to the Business Secretary Vince Cable, described the cuts scheduled for this year as "self-harm". He said: "Five per cent more cuts are the last thing we need while the economy is flat on its back – that would simply be self-harm." He called for the Coalition to instead borrow more using the UK's record low interest rates to fund an ambitious national home-building programme.

Yet Mr Osborne insisted yesterday that he would not sanction more borrowing, even with the economy slumping again.

"The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt," he argued. Even in the grip of a double dip, there is to be no "Plan B".

Double dip has arrived - and Osborne is running out of escape routes

Britain's bosses tell the ONS: it's bad, but not a recession

UK in recession, but some people are weathering the economic storm

Andrew Grice: This political game-changer helps vindicate Labour

David Blanchflower: The Chancellor received plenty of warning

Hamish McRae: Behind the implausible ONS figures we still have problems

Simon English: Osborn desperately needs wiggle room - but he gave that up a long time ago

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