He defended his own plans to eliminate the UK’s structural deficit in five years time as vital to “maintaining stability,” and said the tweaks he made last week were based on “reasonable forecasts” from the Office for Budget Responsibility.
The focus on structural deficits is important, he told the Treasury select committee, because otherwise “you get into the rather crude balanced budget rules, which the world had moved on from, though some countries are looking at them again.”
The chancellor was referring to the Eurozone’s latest plan for long-term stability, under which profligate countries will be punished for borrowing too much, and be forced into balancing their budgets.
Osborne also attacked Gordon Brown’s fiscal rules, saying they were backward-looking and so subject to changes or manipulation in their assessment of the economic cycle.
However, Patrick McFadden and committee chairman Andrew Tyrie both said Osborne’s minor fiscal tweaks were reminiscent of Brown’s.