OECD warns George Osborne that pace of austerity is too fast and will hit poor hardest

The European organisation has previously supported the government’s fiscal policy

A European think-tank has warned the Treasury that the pace and scale of the austerity programme could damage growth in Britain, and that state cut-backs will hit the working poor hardest.

The move by The Organisation for Economic Co-operation and Development (OECD) will be an unwelcome surprise for Chancellor George Osborne, as the influential Paris-based organisation has previously backed the government’s spending cuts programme.

In particular, the OECD points out the manner in which cuts made to the welfare budget will disproportionately affect the working poor.

According to the FT, the move comes amid growing signs that Osborne is struggling to make his promised £12bn worth of cuts from the welfare budget.

In its annual economic outlook report for Britain, the OECD said: “Real public spending is to fall significantly in fiscal years 2016 and 2017, to stabilise in 2018 and rebound in 2019. Evening out the profile of fiscal consolidation would lower its impact on growth. Although the composition of measures is yet to be defined, it is important that they mitigate distributional effects.”

The first tranche of the government’s welfare spending cuts is expected to be unveiled in the July budget, with further cuts expected in the spending review planned for autumn.

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Readers' comments (1)


    This won't come as "... an unwelcome surprise for Chancellor George Osborne ..."

    He already knows this, but he doesn't care. Nor do any Tories. They are the party of the uncaring.

    Tory cuts are ideologically driven, and completely unnecessary. They won't reduce the deficit, and that's not their purpose.

    Their purpose is to dismantle the welfare reforms that our forefathers have fought blood, sweat and tears for over the last century.

    The rest of the world has abandoned austerity as a failed an unnecessary policy. Only in the UK are people stupid enough to vote for it, and even then only 37% of the electorate did.

    So the majority of people oppose these dogma-driven cuts that cause so much damage, hardship and unnecessary suffering.

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