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WITH ONLY a week to go before the Chancellor's pre-Budget report, ministers are angry that the shadow chancellor, George Osborne, has predicted a sterling crisis. Yet there has already been a substantial fall in the pound's value — and the markets have not reacted today to Mr Osborne's comments. Instead, the Prime Minister needs to resolve what are clearly differences between his view and that of the Treasury over the size and nature of the tax cuts expected in the pre-Budget report next Monday. Today he re-emphasised his commitment to an “urgent fiscal stimulus”.
Mr Brown has returned from the Washington meeting of the G20 nations this weekend with some useful pledges on keeping free trade open and on improving banking regulation. However, some of what was said in Washington has heightened the tensions within government here. International Monetary Fund head Dominique Strauss-Kahn has called for a fiscal stimulus equivalent to two per cent of global output, which would imply £30 billion for the UK. But government sources are denying that it will be this size, amid Treasury concerns over the impact of such a large package on borrowing and therefore on the pound.
As the Mayor has today reiterated, chairing his economic “war council” for London for the first time, commitments to much-needed projects such as Crossrail must be maintained, even if the timing cannot be brought forward. However, consumers who are trying to cut back their debts are unlikely to be impressed by government reliance on borrowing. Tax cuts risk looking like a cynical case of bribing the public with borrowed money which will plainly have to be paid back out of future tax increases.
There were signs from Mr Osborne yesterday that the Conservatives may propose tackling government waste rather than borrowing in order to fund tax cuts. Whether they could find big enough cuts is uncertain, and it may prompt the customary Labour accusation that schools and hospitals will suffer from any cuts in a Tory government's spending. But for the moment, it is the Government that is taking the risks, limited though its options may be — and on them that voters' wrath will fall if next week's economic rescue package ultimately fails.
Shut too long
LONDONERS will rightly be angry over the long Tube and rail shutdowns announced today for the Christmas period. Both networks will shut completely on Christmas Day and most on Boxing Day for engineering work. Large sections - including the whole of the Jubilee line - will be closed for four days from 25 to 28 December, and some commuter lines will shut for up to 11 days. This decision represents a triumph of the engineers over rail and Tube passengers.
There is never, of course, a good time to close the railways. But there are other times when engineering work can take place - such as at night - even if it takes longer. Last Christmas's shutdowns and other total closures in recent years seem to have created a precedent for longer shutdowns of track. While this may suit the engineers, it causes huge inconvenience to passengers, at a time when many people are trying to reduce their driving costs, and when the Government is supposedly trying to green the transport system. What is more, such line closures are never enough - as we saw in last Christmas's fiasco of Network Rail's delayed re-opening of rail lines into London. Tube and rail bosses should plan to get the work done in ways that minimises such closures: they are there to serve passengers, and with these holiday shutdowns they seem to be forgetting that.
And celebrating...
JOHN SERGEANT. Whether it's the British love of the underdog or the former political journalist's own gentlemanly charm that won the day, this Strictly Come Dancing contestant has secured enough votes to survive for another week. It may not be great ballroom dancing but his performance is certainly entertainment.
