No alternative to deep cuts, insists Osborne

GEORGE Osborne yesterday insisted he would not shy away from making the biggest spending cuts since 1976, even if the economic recovery hits the skids.

The chancellor gave yet another strong hint that a further round of quantitative easing, rather than a slower pace of fiscal consolidation, would be the best tool to boost a flagging economy.

He said: “The country needs a decisive plan, we’ve set out a decisive plan. There is of course the freedom for the Bank of England to deploy monetary policy tools as well.”

With interest rates at near-zero, any further loosening of monetary policy would almost certainly involve another round of quantitative easing.

Both Mervyn King, the governor of the Bank of England, and Prime Minister David Cameron, have both signalled they would back such a course of action.

Meanwhile, the Labour party stepped up its attack on the government, insisting the redundancy bill for public sector job losses could run into billions of pounds.

However, the Treasury dismissed the claims, pointing out that the vast majority of jobs would be lost through natural wastage.