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Osborne accused of trying to sabotage pound
Joe Murphy, Political Editor17.11.08
PETER MANDELSON stepped up Labour's attack on George Osborne today by claiming he had tried to sabotage the pound.
His extraordinary allegation was that the shadow chancellor deliberately hoped to torpedo the economy by predicting a run on sterling.
"What George Osborne was trying to do in his remarks was undermine the confidence of markets, undermine the confidence of traders that the medium-term direction of government policy is sound," said Lord Mandelson, the Business Secretary. "That's why what he was doing, frankly, was reckless and irresponsible but also quite contradictory." Mr Osborne's allies expressed incredulity at the allegation, which went further than Labour's criticisms at the weekend when the party said Mr Osborne had imperilled economic stability, but not that he had done so deliberately.
The markets showed what they thought of the row today- by ignoring it completely. Sterling fell against the dollar by 0.65 cents to $1.4725 but then climbed back to $1.4933. Mr Osborne hit back by publishing an analysis of sterling falls since the summer, which he said could be attributed to comments or speeches made by Gordon Brown or Alistair Darling. The pound fell from $1.98 to $1.80 in the three weeks after the Chancellor announced that he was reviewing fiscal rules - a strong steer that borrowing would let rip. It fell again in August after Mr Darling warned that the financial crisis was the worst in 60 years.
It plummeted to $1.55 last month after he said in his Mais lecture that he was scrapping the fiscal rules. And when reports appeared claiming the mini-Budget would give away £15 billion, it slid again to below $1.50.
Mr Osborne defended his comments on sterling and denied that he had "talked down" the currency, making the crisis worse.
