Osborne stand firms on sterling claims

Shadow chancellor George Osborne has defended his comments about a possible “collapse of sterling” and insisted that Labour’s mismanagement of the economy was the reason for the country’s economic difficulties

Yesterday, chancellor Alistair Darling accused the Conservative frontbencher of “talking down” the currency in a controversial interview with the Times, while the prime minister said he hoped for a united response to the crisis.

But Speaking on the BBC1’s Andrew Marr show, Mr Osborne countered criticism of contributing to the UK’s economic difficulties by making bold statements on the currency.

Mr Osborne said the value of the pound was a reflection of “economic fundamentals” rather than the consequences of statements by politicians.

Speaking on the programme he said: “Sterling had fallen to a 13-year low against a basket of the currencies on Friday. Markets look at economic fundamentals… not at what politicians are saying.

“Hard-headed market operators are looking at the fundamentals and making a judgment about the British economy.”

The shadow chancellor stated that a lack of confidence in Mr Brown’s leadership of the country had resulted in fears over the health of the economy and led to an erosion of the pound’s value.

He said: “The reason why sterling has fallen by more than 25 per cent in recent months is because they don’t believe Gordon Brown when he says Britain is better prepared than other economies.

“People are making a judgment about the strength of currencies… [exposing] a striking lack of confidence in the British economy.”

The shadow chancellor maintained his criticism of the prime minister’s “fiscal stimulus” proposals which are set to be outlined in the pre-budget report due next week.

He stated that further borrowing would result in higher public sector debt, higher taxes in the future and constraints on the choice of policy options.

“Britain has the worst budget position in the world – we are borrowing more than any other economy [and] it’s the public who have to pay this back,” he said.

“There is a clear choice [for voters] between a Conservative party offering fiscal responsibility and a Labour party that has abandoned prudence and fiscal responsibility,” he added.