Mark Littlewood discusses the UK AAA credit rating downgrading, pound devaluation and Osborne's political future
Mr Littlewood stated that the biggest resulting worry is Osborne’s inability to reduce the deficit which he promised to do when he took the Chancellor’s office two years ago.
“I think he’s got to have a whole look again at what he’s going to do with government spending and how he’s going to close that gap. Kicking this away until 2018, he’s now paying the price for that,” said Mr Littlewood.
Regarding Government plans to reduce fuel duty, Mark Littlewood stated that he supports the strategy.
“I think a good argument could be made that if you reduce the cost of fuel, you might actually start to trigger economic growth, this ‘Holy Grail’ that the Chancellor has been grasping for but not actually picking up.”
Mr Littlewood stated that high energy prices mitigate against business and that a cut in fuel duty may be the injection into the economy that’s needed to stimulate growth.
“It’s a gamble if you take the view that reducing fuel duty will increase revenues but frankly I think that George Osborne is in such a corner he may as well take some gambles rather than play it safe,” argued Mr Littlewood.
Discussing the fall in the value of the pound relative to the euro, Mr Littlewood stated that although those purchasing European goods may suffer, our exporters are likely to gain from this as British goods become relatively cheaper. Unfortunately, however, this devaluation does indicate the current underlying weakness of the UK economy.
Regarding George Osborne’s political future, Mr Littlewood said that David Cameron is committed by Osborne but that Conservative MPs may not be if he doesn’t manage to tackle Britain’s economic problems.
“Pressure on Osborne is going to increase and increase,” stated Mr Littlewood.
Listen to the full programme here. Segment starts at 38.38.