Darling calls on Osborne to "act now" to promote growth

Alistair Darling has criticised George Osborne's handling of the economy

IMF urges Osborne to slow the pace of austerity

After a two-week visit the IMF has concluded that the UK economy is still far from a "strong and sustained recovery" but the chancellor George Osborne shows no sign of a change of tack.
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The loss of the UK's AAA rating from Moody's will add to pressure on sterling but economic impacts may be limited. However, the political pressure on the Chancellor will intensify.

Monday, 20 August 2012 08:29

By Ben Salisbury Follow @news_myfinances

The former Labour chancellor, Alistair Darling, has called on the current chancellor, George Osborne to change tact on the economy or risk causing “immeasurable damage”.

In an open letter, published in the Sunday People, Mr Darling says that the government must focus on “urgent action to promote growth.

Mr Darling calls for the introduction of new infrastructure projects on new homes, the rail network, replacing ageing power stations and a third runway at Heathrow.

Mr Darling claims that the lack of action from both the government and the Bank of England seems to indicate that both have “given up on any plan for growth.”

“It’s as if you’re both saying there’s nothing you can do and nature must take its course. You really must act. And act now. Otherwise it will take years to get Britain’s economy growing again to create the jobs we need,” he said.

Mr Darling said: "Your policies since 2010 simply haven't worked, you need another plan - call it plan B, call it whatever you like. But unless you do something now it will be years before we recover."

He says that with interest rates at a record low, now is the time to invest in major spending projects.

However, the government says that Mr Darling’s claim that the UK can spend its way out of recession illustrates how in his time as chancellor, Mr Darling and the former Labour government built up the UK’s biggest post-war financial deficit. They also criticise him for failing to regulate the banks properly.

A Treasury source claimed that Mr Darling was “behind the curve. An official Treasury spokesman said: “What would damage Britain’s credit worthiness would be relaxing our resolve to deal with our debts. We won’t do that.”

Darling also says that the Bank of England should stop its policy of quantitative easing (QE) until it is proven that banks are passing on the extra money to businesses and individuals through increased lending.

Mr Darling said: "This money is simply not finding its way out of the bank vaults. So the Bank of England should use its powers to make it less attractive for banks to sit on money."

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