Pressure grows for Osborne to go

Wednesday’s woeful growth figures, which showed the UK economy sliding deeper into recession with a 0.7 per cent fall in GDP between April and June, led to calls from within the Conservative Party for George Osborne to be replaced as Chancellor or stripped of his job as head of election strategy.

Liberal Democrat Business Secretary Vince Cable was forced to deny he was angling for Mr Osborne’s job, after telling the BBC he would “probably” make a good Chancellor.

The Chancellor received a strong endorsement from the head of the Organisation for Economic Co-operation and Development, Angel Gurria, who urged him to “persevere” “stay the course” as she said he was “sowing the seeds of what will be the elements for recovery”.

The 0.7 per cent contraction in GDP means Britain has had negative growth for three consecutive quarters, leaving it mired in the longest double-dip recession since quarterly records began in 1955, and possibly since the Second World War.

Mr Cameron acknowledged it was “very disappointing” and promised to do more to stimulate growth by attracting inward investment and supporting infrastructure and housing development.

But he insisted he would not abandon his economic policy, telling an investment conference at London’s Lancaster House: “We’ve taken bold decisions to sort out our public finances and earn credibility with the markets. As a result, in just two years we have already cut the deficit by over a quarter. Our interest rates are less than 2 per cent.

“And my message today is clear and unequivocal. Be in no doubt: we will go on and finish the job.”

Mr Miliband responded: “These figures were not just disappointing, they were a disaster. The Prime Minister seems complacent. He promised change, he promised things would get better but it hasn’t happened.”

Mr Osborne dismissed the Labour leader’s call for change, telling the Lancaster House conference: “You will hear those arguing that we should abandon our plan and spend and borrow our way out of debt. You hear that argument again today. These are the siren voices luring Britain onto the rock. We won’t go there.”

Making a pitch to boost inward investment, Mr Cameron told his audience of business leaders and international policy-makers – many of them in London for the Olympics – that “Britain is back open for business” and added that “nothing symbolises the opportunity of partnership and collaboration more than the Olympics”.

He added: “So yes, I want medals for Britain, and there will be no more passionate supporter of Team GB than me. But I’ve got a job to do this summer, and a big part of that job is to get behind British business, and do everything I can to help secure the trade and investment that will help get the world back to sustained, global growth.”

But he faced rumblings of discontent from within his own party over Mr Osborne’s performance.

Mid-Bedfordshire MP Nadine Dorries called for Foreign Secretary William Hague to be given the Chancellor’s job, while Tory peer Lord Ryder said Osborne should “of course” be stripped of his party role

Describing both Cameron and Osborne as tacticians “obsessed with the management of 24-hour news”, Lord Ryder said: “The Treasury deserves the Chancellor to be there on a full-time basis and to ensure it develops a proper economic strategy.”

Mr Cable later said the Government was now combining 
fiscal discipline with targeted support for infrastructure and housing.