Watchdog rebukes British PM over economy claims

The head of Britain's independent fiscal watchdog rebuked Prime Minister David Cameron on Friday for misrepresenting its position on the impact of the government's austerity programme.

In a speech on Thursday, Cameron vowed to stick to his programme of spending cuts despite increasing concerns about the flatlining economy, which led Moody's to downgrade Britain's credit rating last month.

Cameron said the independent Office for Budget Responsiblity was "absolutely clear that the deficit reduction plan is not responsible" for depressed growth, blaming instead the financial and eurozone crises and rising oil prices.

However, in a public letter to the premier on Friday, OBR chairman Robert Chote said this was not an accurate representation of its position.

"For the avoidance of doubt, I think it is important to point out that every forecast published by the OBR since the June 2010 budget has incorporated the widely-held assumption that tax increases and spending cuts reduce economic growth in the short term," he wrote.

Chote said that "fiscal consolidation measures have reduced economic growth over the past couple of years", although he added that difficulties in the financial sector and the eurozone, deteriorating export markets and external inflation shocks were likely the cause for weaker than expected growth.

Cameron's Downing Street office said the prime minister's position was consistent with that of the OBR, which he himself set up to monitor the nation's finances.

"The OBR has today again highlighted external inflation shocks, the eurozone and financial sector difficulties as the reasons why their forecasts have come in lower than expected. That is precisely the point the prime minister was underlining," a spokesman said.