Political and regulatory news

Issue 1 - 26 February 2010

Osbourne's eight-point plan

George Osbourne has set out the Conservative party’s plans for economic recovery.

Faced with fragile market conditions and a forthcoming general election, the Conservative party has set out its economic model for growth.  In a keynote speech on 2 February, the Shadow Chancellor, George Osbourne, presented his eight-point plan to “build a new, more stable, more balanced economy”. 

The Conservatives ‘eight Benchmarks for Britain’ are to:

• Reduce the budget deficit quickly to protect Britains’ credit rating and international reputation.  This follows a recent warning from Pimco, the largest bond house, that Britain faces an 80% chance of losing its AAA credit rating unless drastic measures are taken.  If elected, the Conservatives plan to eliminate a large part of the deficit in their first parliament.  However, the Shadow Chancellor has been criticised for failing to provide the details behind his intended cutbacks for 2010-2011.
• Create a more balanced economy by increasing exports, personal savings and business investment.
• Reduce youth unemployment and the number of children in workless households.
• Improve the UK’s international competitiveness by cutting business taxes and regulation.
• Increase the private sector’s share of the economy.
• Improve the productivity of public services, for example by extending performance rewards and improving financial controls.
• Build a safer banking system through regulatory and structural reforms.  Plans include replacing the tripartite system of regulation with full oversight by the Bank of England and forcing banks to offer more credit to small and medium-sized businesses.
• Create a greener economy by reducing greenhouse gas emissions and increasing the UK’s global share for low carbon technologies.  There are also plans to create a single institution, a Green Investment Bank, to control public and private funding for environmental initiatives.

The Labour Government set out its policy on the economy in Alastair Darling’s Pre-Budget Report on 9 December (see previous article),  in which he forecast a rise in public spending in 2010-2011 in order to support economic recovery.  Further updates are expected from the Chancellor in due course, particularly in light of speculation that the 2010 Budget will be held in March, prior to the general election.

Next article: The future of UK accounting standards

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