Government finance watchdog rebukes Cameron over growth claim

OBR chairman Robert Chote wrote to the Prime Minister stressing all its forecasts had included “the widely held assumption that tax increases and spending cuts reduce economic growth in the short term”.

His intervention yesterday was triggered by a passage in a speech by Mr Cameron at a business in Cross Hills, near Keighley, on Thursday where the Prime Minister said the OBR was “absolutely clear that the deficit reduction plan is not responsible” for slow growth.

Mr Cameron claimed the OBR had said growth was depressed by problems in the Eurozone, the financial crisis and rising oil prices.

But in his letter, Mr Chote said those factors had been put forward as reasons why growth had been lower than forecast not the reasons for slow growth overall.

Downing Street insisted the OBR had not contradicted the Prime Minister.

A spokesman said: “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.”

The OBR was set up by the Coalition in 2010 as an independent body to take economic growth and Government borrowing forecasts out of politicians’ hands.

Shadow Chancellor Ed Balls said: “David Cameron’s attempts to defend his failing economic policy are getting more and more desperate but as Prime Minister he has an obligation to be straight with people and not play fast and loose with the facts.”