George Osborne is right to warn of too much borrowing

The Shadow Chancellor today hits out in the Times against the government’s wish to borrow like there’s no tomorrow.

Borrowing is just tax deferred.

Borrow too much, and the interest bill will rocket.

Labour used to say they wanted to save money on interest expenditure. They were right then. What’s changed?


  1. rugfish
    November 15, 2008

    Mandelson is back, that's what's changed.
    Brown has a new spin doctor to court public opinion and an obvious policy of take care of today and let tomorrow take care of itself because he won't be there.

    If I was him ( which I'm glad I'm not ), I might be thinking we've lost this one so let's stuff the Tories good and proper and we'll get back in with ease in 2015.

    Someone needs to catch on to this despicable policy and find out if it really exists because all the signs are there that is does.

  2. Brian Tomkinson
    November 15, 2008

    What happens when there is no one willing to lend? I notice that the BBC and other parts of the media are criticising Osborne for talking about a run on the pound – hadn't they noticed! I was alarmed to hear Will Hutton on Today say that £100billion of foreign investments have been withdrawn from this country in just the last two months.

    1. John of Enfield
      November 15, 2008

      Apropos Brian Tomkinson's comments about the Today programme this morning.

      It was very interesting hearing the BBC trying to push the idea of Osborne being very irresponsible in mentioning that there would be a future run on Sterling if Brown borrowed too much. They discussed it for a short while & then someone mentioned that the pound had already fallen from over 2 to under 1.5 to the dollar in the last few weeks! The attitude changed to one of "Oh. Yes! The empower HAS no clothes".

      Amazing. Spin your way out of THAT Gordon.

      PS – Callaghan went after the pound fell by only 14%. I can see GB going by the end of the year at this rate.

    2. APL
      November 15, 2008

      Brian Tomkinson: "What happens when there is no one willing to lend?"


      If it can happen to the fed, then it can easily happen to the UK Gov.

  3. Brian Tomkinson
    November 15, 2008

    John, (Not for posting) I think your computer clock needs resetting.

  4. Alfred T Mahan
    November 15, 2008

    It's marvellous that Osborne at last has found the courage to warn of the evident dangers of Labour's approach. Let's hope he now goes on to ram the message home. The people need to know, and telling them unpleasant truths is part of true political leadership.

    it's sad that Labour are accusing him of talking the pound down, but it's a sign of weakness in my view and may not be unrelated to Brown's attack on Cameron at the Despatch Box on Wednesday. If the Opposition can't openly criticise government policy it's a sad day for democracy. It's also typical of the BBC that they are focusing on that rather than the underlying issue, namely that the cure for too much borrowing is not more borrowing.

  5. Tony Makara
    November 15, 2008

    The Conservative leadership now need to keep the Sterling crisis in the mainstream news so that Joe Public realises that the Pound in his bank account is worth less with each passing day under Labour. Not only borrowing but showboating interest cuts are going to weaken Sterling even further. This is a big stick to hit the government with because it effects everyone. The Pound in our pockets is losing value and the government is to blame, get the message out and make it stick.

  6. oldtimer
    November 15, 2008

    I noticed this morning that the BBC Breakfast programme wheeled out a previously unseen "political correspondent" to plug the Labour party rebuttal line (complete with irrelevant references to Corfu etc – never mentioned when Lord Mandelson`s name comes up). There was no mention or description of the substance of Mr Osborne`s case against the government.

    There is good reason for the points that he has made – and every reason for the government to attempt to shut (shout?) down the debate. They have an indefensible case.

  7. Mark
    November 15, 2008

    George Osborne was absolutely right. The Tories need to get across the simple message that last time our economy went into recession in 1991 government borrowing as a percentage of GDP was 26%. Now, even on Gordon Brown's figures it's 38%. And government spending was going to exceed tax revenues by an alarming amount even before the government noticed what was happening. That gives limited room for more borrowing and should cause any responsible government to look hard at it's own spending.

    This should give George Osborne the way out of his unfortunate commitment to match the present government's spending plans for the 2 years after the next general election.

  8. Bill Quango MP
    November 15, 2008

    “George Osborne is right to warn of too much borrowing”

    Not according the BBC. Osbourne is a traitor for suggesting such a thing. Now Osbourne has damaged the pound!
    You'll know Mr Redwood. Do the researchers examine government press releases with thought, analysis,checking of facts and figures, discretion and a sense that might be being party to some state propaganda or do they just read whatever the government puts in front of them without question.

  9. Man in a Shed
    November 15, 2008

    Brian – the BBC reported a while back that £625billion had been removed from the money markets some time back. Leading to the current set of collapses.

    This is on of the things I have failed to grasp about the current situation. The explanations from the BBC/Labour are all about banks not lending to each other – but somewhere someone has stopped lending to the banks. There is only a short list of who that could be.

    On a separate and unrelated subject I see Brown's government recognised China's direct rule of Tibet today.

    1. DiscoveredJoys
      November 15, 2008

      Or perhaps not entirely unrelated as a quid pro quo for some latge loan from China later on…

      Look out for some very quiet but suprising news items about agreements with India and Saudi Arabia (and any other country with large sovereign funds or natural resources).

    2. Patrick Turner
      November 16, 2008

      Clearly it's a case of "a good day to bury bad news". More Mandelson black magic.

  10. ChrisD
    November 15, 2008

    I listened with interest to the Today programme's interview with Will Hutton and Michael Fallon. Their pointed response regarding the sharp decline in Sterling and the reasons why were not news to me. But then I don't rely on the BBC for my information on the economy.
    What I really found alarming, was the very illuminating comment from the Today interviewer regarding how they view the reporting of Sterlings performance in recent months.

    How on earth can we the electorate judge this government's recent economic performance, the condition of the UK economy, or if the measures in the PBR are right for the country at this time without the full reporting of Sterlings performance and how increased borrowing might effect it further?

    How on earth can the main opposition do their job properly if they are hamstrung in this way, the run on Sterling has already occurred in the most dramatic way possible in the last two months?
    How can the media then give room to Brown's accusations against the Tories today, when they were silent about the implications for the recent fall in Sterling as the government briefed about huge tax cuts and increased public spending?

  11. Johnny Norfolk
    November 15, 2008

    Its the opposition s job to warn of foolish labour actions and that is what he has done al last.

    Of course much of the media will critisise him as they are all they are all part of labours plot.

  12. alan
    November 15, 2008

    Mr Redwood.

    I am sorry to rain on your parade. However, whilst I admire your loyalty to George Osborne I think it was politically immature.

    The Tories have had a good week following the disgraceful scenes at PMQ's by both the Prime Minister himself and his back benchers.

    That has been lost by Osborne's interview. I believe that such an interview, which definately broke away from the partisan approach announced by Cameron at your conference, should have been made by your leader and your leader alone.

    That would have had more gravitas as it would have been backed by an argument consisting of the great many errors made by Brown over 11 years.

    Now with Browns Broadcasting Corporation and Boulton and the whole Sky team pushing the Brown story out. The Tories have well and truly lost the initiative.

    I believe that there is a real need for more experienced politicians with more street cred! on your front bench. I would love to see your goodself. But I am afraid Cameron strikes me as a man who will not change as he believes it may show him as weak! A true leader puts party first and self second.

    Good luck to you.

  13. mikestallard
    November 15, 2008

    "There could be a complete collapse of the banking system, many millions unemployed, a return to barter, "self sufficiency" (a Green word meaning poverty), extremist riots, looting."
    Who said that?
    Staggeringly, it was Charles Moore in the Telegraph this morning. He is an utterly respectable, good, truthful journalist.
    The Leader of the Telegraph, too, asked the Conservatives to reflect the anger of various sectors of the public who are fed up with what is going on.
    Typical of Mr Brown and the BBC to attack the man as if he were alone. How girlie is that?
    Actually, Mr Osborne (at long last) is speaking for a huge sector of the population.
    Yes, we are worried.
    Very worried.

  14. Alan Phillips
    November 15, 2008

    Shame Labour couldn't have piped up when Robert Peston was talking about the banks and the damage done by his loose lips.

    Double standards of the highest order, oh I forget, the naritive was Gordon Brown, fiscal genius….

  15. anoneumouse
    November 15, 2008

    Anyone know what is happening at The Grapes of Wrath summit.

    Has Crash Gordon saved the world?

  16. james barr
    November 15, 2008


    GO is spot on. What's all this rubbish about political convention preventing politicians from commenting on the pound? Do we really think that the markets listen too much to what GO says. They made up their minds a while back that the UK credit card is maxed out and taking out another tax payer funded card is only going to sink the value of UK plc, as expressed by sterling, only further. Labour lie and lie and the lemmings at the BBC splutter on about "convention" instead of reporting the real story which is that sterling is collapsing. The BBC are nothing more than lackeys of the Nu Liebour project. It's time for a root and branch overhaul of the Beeb. It's also time for DC and his team to come out with all guns blazing and reveal the horrifying levels of debt ramped up by the son of the manse, the real figure that includes PFI, Network Rail and public sector pensions.

  17. Acorn
    November 15, 2008

    John, I think your Web Host – WordPress – has the add-on that does "all posts by [name]". This would be useful as we could refer to it rather than having to keep posting the same posts over and over again.

    Your loyalty to the party is admirable. Your party, unfortunately does not have a front bench with sufficient gravitas to command the "spin" heights; frankly, you are all acting like gentlemen. Unfortunately these times are not for gentlemen or the female equivalent. (Has Theresa May ever been heard to use the word "F**k"?)

    You have to start thinking like Mandelson & Co; that is, DIRTY. It is evident that the "dark destroyer" has been given this job for NuLabour. He is acting as the Praetorian guard for the NuLabour front bench. He is using the time honoured system of "give them something to deny".

    You have to up the horsepower in your "rebuttal" department. Osborne is taking too many hits. Bury them in facts about public debt and the devaluation of the currency; BUT, finish with a sound bite the plebes can understand. Such as, "the government has printed enough money to pay off all the mortgages in Manchester", or such like.

    I know you are at a massive disadvantage as an opposition, you can't get the real numbers and our civil servants don't get jailed for telling lies – they would in the US for instance.

    We all know that NuLabour is wasting billions of taxpayers money. I estimate that, at least, £120 billion out of the £600 odd billion they spend. You have to show this to, at least, the non-socialised section of voters – about 34 million if you neglect child allowances – in terms that they can understand.

    Alternatively, you could start the Redwoodian Party. I reckon you would pull enough votes from the, taxpaying; play by the rules; decent; love my country voters, to be the desideratum at the next general election.

    November 15, 2008

    The Governor of the BoE has been found wanting throughout we believe but could you please shed some light on a comment he made at this week's press conference?
    He said that RPI inflation is bound to fall now that the bank rate has been cut so decisively.
    We non-economists have argued this all along – that the MPC could fulfil their remit and reduce inflation to target levels by voting for a sharp rate reduction.
    If this is the case why have they delayed so long during which time they – apart from Mr Blanchflower – have helped exacerbate the current difficulties?

    Has the Bank's remit been wrong all along or has it just been blurred? We recall that Mr King's main priority 2 years ago seemed to be to 'cool' the housing market but housing prices/inflation were removed from the equation we thought?

    The whole vital subject does to us seem to have been a mish-mash which has unravelled as the Tory legacy has dwindled. We'd welcome your analysis if possible please,

    Incidentally well done on quoshing that silly Rosie Winterton on last night's Question Time on Radio 4. It's clear with the effort that goes into this blog that, unlike Rosie, you DO read your correspondence personally – we just hope you'll also have time to respond to this too

    NB As an aside we cannot, however. forget that Messrs Cameron & Osborne did rather bounce Brown into reappointing Mr King early this year which, after his handling of the Northern Rock crisis, greatly surprised us at the time.

    Reply: I think the MPC is predicitng a collapse in inflation partly because commodity prices have now fallen so far and so fast. They have been slow to react, but they would say it was not clear until recently that these prices were under control. I was predicting lower inflation next year in January – the MPC seems to be unable to look ahead very far, which makes it a bad judge of interest rates.

  19. Susan
    November 15, 2008

    To Anoneumouse @ 6.51pm – apparently, according to the BBC and Sky News, he's been well-received. So that's fine then.

    Osborne and the party behind him have done the right thing in speaking out but I'm rather tired of hearing how a Shadow Chancellor of the Exchequer has not only breached protocol but also sold Sterling down the river when every man and his monkey knows that this was done long ago.

  20. Nick
    November 15, 2008

    One part that is true at the moment is that tax cuts need to be targeted at people who will spend. If it just goes in saving, it is people taking the tax cut funded by borrowing. Investing it, in order to pay back the tax when the government racks it up to pay back the borrowing.

    That means increasing personal allowances. This helps the working poor.

    The tories should announce a policy to bump up the PA to the income of the minimum wage. About 12K

    Then when Labour copy it, announce a policy, vote them out, cut out the middle man

  21. Lola
    November 16, 2008

    What still entirely puzzles me is why Brown has done this to the country. I mean the man is not a total idiot, surely? He must have known what his policies would do the UK finances? So why has he done this? What does he hope to achieve?

    Can anybody explain it to me?

    1. Tony Makara
      November 16, 2008

      Gordon Brown and the Bank of England deliberately kept Sterling overvalued so as to mask inflationary pressures caused by easy-credit. Although we saw this in the housing market the inflation didn't show up in the high street as the overvalued Pound made imports appear cheap. Of course we all paid for this strategy with higher interest rates. Now the Pound is crashing because its value wasn't brought down to a natural level earlier.

      1. Lola
        November 16, 2008

        Yes, I know that but that's the 'what'. The question is why? Why pursue policies like these, and others, that are absolutely bound and certain to impoverish us? At some stage there will always be a reckoning and the result of which we are now seeing. So what could Brown hope to gain from his policies?

        1. mikestallard
          November 16, 2008

          Mr Brown, as I read it, is a man with a mission. That mission is to improve people's lot in life.
          Unemployment, single mothers, the NHS, Education, Social Services, are all part of this package. and he really means it. He wants all these things to be world class. Add in global warming and Britain becoming "the Gulf States of the North" with its wind farms, and – bingo! – you have a lot of things to pay for.
          He has always overspent. First, there were things he could sell off and tax.
          It didn't seem to matter much at the time. People groaned and carried on.
          Now the cupboard is bare and he has nobody who will lend any more money to him. So he is trying, desperately, to follow the money into the Far and Middle East.
          That, I suggest, is why such an intelligent and caring man has done this incredibly stupid act of bankrupting our country.
          The most dangerous politicians (in every country) are the ones with ideals which they ruthlessly follow without taking advice from experts who know what is going on.

        2. Tony Makara
          November 17, 2008

          Gordon Brown's prime objective right now is not to save the British economy but to win the next election. If he can create the 'appearance' of a revival in economic fortunes he believes it may well be enough to give him five more years in charge of our country. There is a problem though for Brown, at times when interest rates are cut and the currency weakens it is exports that lead the economic revival, however our capacity to export under Labour has severely weakened as both our manufacturing and agricultural sectors have shrunk. Gordon Brown's service-economy is entirely dependent on credit fuelled domestic demand and right now debt has completely surpressed that demand. So, there will not be any sort of permanent economic revival, Brown knows this of course, but if he can create the illiusion, it might just be enough to return him to number ten.

  22. Johnny Norfolk
    November 16, 2008

    He must have been reading your blog John.

    I am pleased he has spoken out. I have read his piece in todays Telegraph and he is right, You can already see Labour dont like it, but then it is the truth without spin so that will not suit them.

    We now need Osbourne to come out fighting and defend what he has said. Osbourne has every right to be an angry young man.

    The Tory party needs to take the gloves off or they will be accused of just muttering in the wings.

  23. jean baker
    November 16, 2008


    Private Funding Initiatives yield vast profits for 'closed shop' labour unionists paid for by vast borrowings against taxpayers. Rife in NHS, elderly care, now introduced in the police – government linked private contracts – Nulabor's wealth distribution. Fat cats wish to maintain lucrative deals funded by unaffordable borrowings. Appeasing immigrants, benefits sector is 'vote' related to the detriment of the rights of 'middle England's' taxpayers and British workers. Nulabor aims to decimate democratic rights, English culture, heritage and sovereign nation for self serving unionist profit.

  24. Freddy
    November 16, 2008

    Re : Lola
    "What still entirely puzzles me is why Brown has done this to the country. I mean the man is not a total idiot, surely? He must have known what his policies would do the UK finances? So why has he done this? What does he hope to achieve?"

    Brown has had a decade of people telling him he is the most wonderful chancellor in history, he is super-prudent, he is an economic genius, blah, blah, blah. His character is weak enough that he already believed this anyway.
    So, in answer to your question, I find it highly likely that he not only did not know what his policies would do, but, also, he still does not accept what they have done.

  25. Mr C
    November 16, 2008

    George Osborne's comments about Sterling are correct. Osborne needs to keep pushing on the issue. Osborne has clearly hit a nerve, hence the shrill reaction to his comments by Brown and the New Labour establishment.

    Unlike many aspects of this financial crisis, the decline in Sterling is easily demonstrated to the voting public. The fall in our currency directly contradicts Brown's assertions that Britain is best placed of the major industrial economies to ride out the recession and that our current difficulties are primarily the fault of others overseas.

    Sterling’s decline fixes the blame where it should be-on Brown and the incompetent Labour Government. Once the public's attention is directed to this issue all Brown's sophistry and international show-boating will count for nothing. Good.

    By staying silent, Osborne and others would be colluding in the deception Brown and his government are playing on the British public.

    1. Acorn
      November 16, 2008

      Welcome to to the Starship Redwood Mr C; I agree with you. The plebes don't understand that the value of a nations currency is the equivalent of a companies share price. When confidence drops in a company's future earning power, its share price drops. It is exactly the same for a nation's currency value. Osborne should be shouting this fact.

  26. Richard
    November 16, 2008

    Unfortunately while GO is entirely correct to warn about sterling, it gives the BBC/Labour the opportunity to spread the blame – as in Andrew Marr's comment today: if sterling now falls further, it will be due to GO's lack of judgement!

  27. Steve
    November 17, 2008


    George makes the mistake of trying to predict the future. He would be better off at this stage to continue to ram home the message that we are in this position because of New Labour actions and policies. State "labour has already caused a run on Sterling greater than any time before". As the value of Sterling has fallen relative to other currencies the UK cannot have been equally impacted by the economic problems facing all countries.

  28. Julie Richards
    November 17, 2008

    Keep going George, keep driving home the point that for years we've been fed on lies, more lies and mega lies. Labour's transparency is like a mud mire with continual deceit and total lies. They just don't know how to tell the British public the truth. So much for the son of the manse!!

    Certainly don't resign your job, we want honesty, transparency from you and your mates in Westminster.

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