US ambassador questions speed and scale of Osborne’s cuts

US ambassador Louis Susman has questioned the wisdom of George Osborne’s massive spending cuts, warning they risked plunging Britain into a double-dip recession. His remarks echo those of leading economists at the IMF last week, who said the US and EU economies remained too fragile to absorb major deficit cuts, concluding that additional spending and tax breaks would be a much more sensible strategy.

George-Osborne Susman, in an interview with the Telegraph, praised the chancellor’s determination to eliminate the deficit in a single parliament as “very admirable”, but warned:

“The question is, is it too much, too fast? We worry about double-dip recession and the lack of growth.”

Today’s Mirror adds:

“He then heaped further embarrassment on the Tory-led coalition by saying President Obama was using similar plans to Labour’s to wipe out the huge US deficit. His warning came as Labour leader Ed Miliband announced plans for a £2billion tax on City fatcats’ obscene bonuses to save the economy from ruin.

“Mr Susman spoke out ahead of next week’s Budget when Mr Osborne is expected to admit the battered UK economy will grow by less than expected this year. Alarming figures recently showed it shrank at the end of 2010 – even before the Coalition’s painful austerity measures, including raising VAT to 20%, hit…

“The ambassador pointed out President Obama is planning for economic growth of 3.5% while halving the US deficit by 2013. That goal is like the Labour commitment, made at last year’s general election, to halve the UK deficit before the next election rather than wiping it out in one go.”

Last week, former US Under Secretary of Commerce for Economic Affairs Robert Shapiro called on world leaders to heed the lessons of history:

“Much of the developing world learned the painful lessons of the 1997-1998 Asian financial crisis. So, their policymakers imposed new limits on leverage, and their financial institutions passed on investing in the toxic assets that brought down the U.S. and European economies…

“The Great Depression produced a large sheaf of institutional reforms which have helped the world avoid a repeat ever since. Yet, the Nobel Laureates and other experts gathered this week by the IMF also agreed that the United States and Europe have yet to undertake comparable reforms that would make another global financial crisis less likely.

“If we don’t, they warned, another financial crisis almost certainly will befall America and Europe in the foreseeable future.”

http://twitter.com/janedaisypain/status/47646076144066560 Jane Phillips

RT @leftfootfwd: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy
http://twitter.com/demiurgo31/status/47646193509085186 Ruben de Dios

RT @leftfootfwd: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy
http://twitter.com/falseecon/status/47647164985384960 False Economy

US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy (via @leftfootfwd)
http://twitter.com/danpoxton/status/47648674599280640 DanielPoxton

RT @FalseEcon: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy (via @le …
http://twitter.com/purplehayes2/status/47650550799536128 Matt Hayes

RT @FalseEcon: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy (via @le …
http://twitter.com/blanchardspov/status/47652693040316416 Simon Blanchard

RT @FalseEcon: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy (via @le …
http://twitter.com/sopranosfan_/status/47654864628629505 Harry R

RT @leftfootfwd: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy
http://twitter.com/oldmankelv/status/47657266408734720 Kelvin John Edge

RT @leftfootfwd: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy
Ash

“President Obama is planning for economic growth of 3.5% while halving the US deficit by 2013. That goal is like the Labour commitment, made at last year’s general election, to halve the UK deficit before the next election rather than wiping it out in one go.”

This is rather disingenuous. Labour’s plan was to halve the deficit over four years starting this year, i.e. by 2015; halving it by 2013 is probably about what the Coalition plan to do. (The relevance of all this is questionable, since the UK and US are different countries with different deficits and different constraints on what’s achievable by when and how, but still…)
http://twitter.com/oldmankelv/status/47658638474612736 Kelvin John Edge

RT @FalseEcon: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy (via @le …
Sean

Ash, it is halving the structural deficit, not the total deficit (structural and cyclical) and no one believes that Obama will halve the deficit by 2013.
http://twitter.com/yrotitna/status/47725230017359872 Juan Voet

RT @FalseEcon: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy (via @le …
http://twitter.com/jackielive/status/47745696404733953 Jackie Fleming

US ambassador questions speed and scale of Osborne’s cuts http://bit.ly/eX7I37
Mr. Sensible

I will be interested to see how Osborne explains undershooting his own growth forecasts…
http://twitter.com/visceralwriting/status/47959442611908609 Pauline Kiernan

RT @FalseEcon: US ambassador questions speed and scale of Osborne's cuts: http://bit.ly/evzFWz reports @ShamikDas #FalseEconomy (via @le …
http://www.lawyersgunsmoneyblog.com/2011/03/ideology-in-the-name-of-austerity Ideology in the Name of Austerity : Lawyers, Guns & Money

[...] Universities are not immune. Given the job losses elsewhere in the economy, a sound long term approach would be to enhance, rather than stifle, universities. Cuts for the 2011-12 academic year have been released, and it’s not a relaxing read — only one university will not see an overall reduction in financing — with more dramatic cuts on their way. My august institution of higher learning enjoys a 4.9% cut for next year, finally placing us on a top-20 list. The coalition government perseveres, even though data from the IMF suggest that perhaps this isn’t the most prudent approach. (See additional warnings by an IMF-convened conference here, and a warning by the US Ambassador to the UK that the spending cuts proposed by the coalition government as bonkers here.) [...]