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Ben Chu: Austerity makes for strange bedfellows

Ben Chu
Friday 31 May 2013 01:10 BST
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Outlook It takes something special to make George Osborne look like a Keynesian, but the European Commission has managed it. It emerged this week that the commission's economists think the Chancellor should be cutting even faster. In their annual review of the UK economy they wrote that the deficit should be reduced below the 3 per cent of GDP deemed prudent by the eurocrats by 2014-15.

Under the latest official projections the deficit will be 6 per cent at that point. So if Mr Osborne were to follow the commission's advice, he would have to impose a further £45bn of immediate spending cuts or tax rises in the Autumn Statement and next year's Budget. "We're serious about this," I was told by a spokeswoman in Brussels when I rang up to confirm that this was indeed what they wanted to see.

This barmy advice is very similar to that being offered by the Europhobic right wing of the Tory party, who believe Mr Osborne's big economic mistake is that he did not cut far enough in his 2010 "emergency" Budget. So in the European Commission these anti-EU zealots have discovered their economic soulmates. This could be the start of a beautiful friendship.

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