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Borrowing prediction dismissed as a dodge

BORROWING

Labour accused George Osborne of massaging statistics yesterday after the Chancellor's surprise announcement there would be no rise in borrowing next year.

Shadow Chancellor Ed Balls questioned the inclusion in the figures of an extra £3.5 billion, for the future sale of 4G mobile phone licences. Without that estimate, the Coalition would be forced to borrow £2bn more, he said.

The figures came from the independent Office for Budget Responsibility (OBR), but Mr Balls condemned their use, describing their appearance in the statistics as a "complete dodge".

He said Labour would examine the details to see if there had been "any dodgy dealing" over the predicted borrowing figures.

During heated exchanges in the Commons, Mr Balls also accused Mr Osborne of failing by sticking to his austerity drive.

He accused Mr Osborne of revealing the true scale of the Coalition Government's "economic failure" after confirmation it was on track to miss its target of ensuring debt is falling as a share of GDP by the end of this Westminster parliament.

He rejected Mr Osborne's suggestion there were only two alternatives to the UK's economic problems – higher taxes or spending cuts. "Growth", he suggested, was another option.

There was obvious surprise on the Labour benches when Mr Osborne announced that borrowing would not rise next year.

Mr Balls even appeared to stumble in his response, accidentally saying that it would.

But the party last night pointed to a number of other economic indicators which, it said, showed the Coalition was mishandling the country's finances. These include official forecasts that the economy shrunk this year with growth of -0.1%.

The Chancellor has insisted he has no intention of changing his central economic plan and rejected what he described as Labour's "road to ruin".

But Mr Balls said it was the Chancellor's decision to stick to his so-called Plan A that was the problem. He's "not wavering, he's drowning", he told MPs.

He said the Chancellor's fiscal strategy had been "completely derailed".

"The defining purpose of the Government, the cornerstone of the Coalition, the one test they set themselves to balance the books and get the debt falling by 2015, is now in tatters.

"In last year's budget the Chancellor said our deficit reduction plan is on course, we will not waver. On course? Not wavering? He's not wavering, he's drowning".

But the Chancellor hit back, saying: "There is only one person in this chamber who is drowning and that is the Shadow Chancellor. That was the worst reply to an Autumn Statement I have ever heard in this house.

"If one thing changes as a result of this Autumn Statement, it might be a Shadow Cabinet reshuffle."

Mr Balls said growth had been downgraded "this year, next year, the year after, the year after and the year after that too".

He claimed it was "the longest double-dip recession since the Second World War, now followed by the slowest recovery in the last 100 years". Former Labour Chancellor Alistair Darling also questioned the figures.

He asked why the public should have confidence in the forecasts which, he said, "looked remarkably similar to the growth profile announced in 2010, which singularly failed to materialise".

But Mr Osborne said: "This is the OBR's best estimate of what is going to happen to GDP over the next few years.

"The reason why their forecast two years ago was wrong was due to three things: the impact of the financial crisis was greater than they assessed, there was an oil price shock in 2011 which hit all oil-consuming economies, and there was the impact of the eurozone [crisis]."

Meanwhile, ratings agency Fitch, which placed the UK's AAA rating on negative outlook in March, said it would conduct a further formal review of the rating in 2013 following the next budget statement.

Fitch said the Chancellor's statement confirmed "the scale of the multi-year fiscal consolidation challenge facing the UK".

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