To consistently mislead the British public on the likely economic consequences of a hung parliament, as the Tory Party continues to do, is simply unacceptable.
Despite growing evidence to the contrary, David Cameron and his team continue to argue that a hung parliament will lead to economic meltdown for the UK. As Left Foot Forward has clearly pointed out, suggesting that coalition government will necessarily lead to a sterling crisis and the IMF being called in is an example of fearmongering of the very worst kind, wilfully ignoring the facts and misrepresenting history for purely political purposes.
Today the Institute of Directors, a right-leaning business organisation traditionally supportive of the Conservatives, has rubbished the Tory argument. Miles Templeman, the IoD’s Director-General, argues that a coalition government could “work well”, adding that “I don’t think it’s as simple as saying that hung parliament and coalition is automatically bad.”
The IoD takes a more constructive line than the Tory leadership, with Mr Templeman rebuking Mr Cameron’s “irresponsible” approach to what is an increasingly likely scenario by suggesting that:
“We’d better start thinking about how we act constructively to make it work, rather than bemoaning the fact that it can’t work.”
Casting further doubt on the disingenuous Clarke & Osborne sterling prophecies, a leading expert on foreign exchange suggested in yesterday’s Financial Times that far from being a problem of a hung parliament, the biggest risk to sterling comes from the possibility of an outright Tory majority.
UBS’s Mansoor Mohi-Uddin argues that a government that reduces public spending too hastily, forcing a resumption of quantitative easing and an overreliance on monetary policy to generate economic growth, will lead to sterling weakness:
“Be wary of sterling strength if the 2010 elections result in a clear majority for any party that then tightens fiscal policy too quickly.”
The Tory line on the potential impact of a hung parliament is consistent with their continued talking down of Britain’s economy. Eschewing evidence that what the public want is a positive message rather than fear, the UK has been described as ‘broke’ or ‘bankrupt’ countless times by Mr Cameron and his team, with the right-wing press drawing comparisons between the UK and Greece.
But as David Miliband clearly pointed out on the Today programme this morning, a combination of lower deficit / debt to GDP ratios, significantly longer debt maturity profiles and economic growth versus Greece’s deep recession means that there is no indication from the markets that there are serious concerns about Britain’s ability to service and refinance its debt. Listen to the Foreign Secretary’s interview here.
Of course a hung parliament will bring a few days of uncertainty as the spoils of power are divided amongst the lucky few, after which the politicians should be able to get down to the serious business of governing. However to consistently mislead the British public on the likely economic consequences of such a political outcome, as the Conservative Party continues to do, is simply unacceptable.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.