George Osborne is just back from a five-day trip to China. The chancellor shook hundreds of hands and travelled thousands of miles to encouraging deeper trade links between the UK and the People’s Republic. As such, he now stands accused of kowtowing to the Chinese. I’d say such criticism is nonsense.
I’m no Osborne cheerleader. This column often highlights, for instance, the gulf between the Treasury’s “austerity” rhetoric and what’s actually happening to our public finances. While the annual budget deficit has fallen from the mind-blowing 11.4pc of GDP the Chancellor inherited in 2010, it remains huge at 5.7pc of national income – higher than when the UK went cap-in-hand to the International Monetary Fund in 1976.
The pound rose sharply last Wednesday on speculation that the Bank of England will soon raise UK interest rates. The nine-strong Monetary Policy Committee was “unanimous in its decision” to keep rates at 0.5pc, the newly published minutes of its July meeting showed.
That was as expected. The UK’s “bank rate” has been on hold, after all, for no less than 76 consecutive months. “A number of members”, though, are now considering an increase, the latest minutes revealed. And that was what moved the needle, with the pound up over half a cent against the euro the day the minutes were published.
George Osborne is in “I told you so” mode. Much to the Chancellor’s satisfaction, the International Monetary Fund has just upgraded its UK growth forecast for 2014 to 2.9pc – suggesting Britain will this year grow faster than any other G7 economy.
Just twelve months ago, with the UK in danger of triple-dip recession, the IMF reprimanded Osborne for “playing with fire”, urging him to abandon attempts to consolidate Britain’s public finances and speed up government spending instead.