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Moody's downgrade will stiffen George Osborne's resolve (The Sunday Telegraph)

    CPS Director Tim Knox was quoted in Business Editor Kamal Ahmed's column in The Sunday Telegraph on Sunday 24th February 2013.

    To view the full article, please visit The Telegraph website

    "At a time of ballooning debt, the Government still found – one assumes down the back of the fiscal sofa – a few pages of policy initiatives with prices attached. There was a £50 cut in water bills for families in the south-west of England, a £250m fund to support "energy-intensive firms", a £1bn "youth contract" to subsidise work placements, a regional growth development fund totalling £1bn, a restriction on rail fare increases and £50m to safeguard cross-border sleeper train services (and, no, I didn't make that last one up).

    "The harder the times, the greater the temptation for any Chancellor to indulge in initiativitis," said Tim Knox, director of the CPS.

    "A few hundred million quid can be thrown at a particular region or demographic group and the headlines can be dissipated. Even with another £145bn of debt being incurred over the lifetime of this Parliament, the Chancellor still felt he should spend your money."

    More significantly, Mr Osborne changed one of his fiscal rules into a "rolling target", allowing himself the luxury of hitting the Government's stated aim of eliminating the cyclically adjusted deficit two years later and well into the next Parliament. Moody's now expects that the UK's gross government debt level will peak at just over 96pc of GDP in 2016."

    To view the full article, please visit The Telegraph website

    Date added: Monday 25th February 2013