Osborne faces pressure over pound

Osborne faces pressure over pound

Shadow chancellor George Osborne has brushed aside criticism of his warning about the collapse of sterling.

Mr Osborne defended his comments about Gordon Brown’s “irresponsible” policies possibly leading to a run on the pound.

He has insisted the prime minister’s decision to abandon financial prudence is partly to blame for the pound falling to record lows.

Chancellor Alistair Darling questioned Mr Osborne’s political judgement in “talking down” the pound.

Speaking after the G20 financial summit in Washington, Mr Darling said he was surprised at Mr Osborne given the agreement among most world leaders on the need for tax cuts and public spending to boost their economies.

Earlier, Mr Brown, who is also in Washington, said he was disappointed by Mr Osborne’s “partisan talk”.

Defiant statement

Sterling has fallen sharply in recent weeks amid fears about a UK recession.

It has lost more than a quarter of its value against the dollar and hit a near-record low against the euro.

On Saturday, Mr Osborne said the more the prime minister borrowed, the less attractive the currency would become.

His comments attracted criticism from Labour politicians, who said he breached the convention that senior politicians do not predict a run on the pound.

Conservative leader David Cameron has not yet publicly backed his chancellor.

However, former Tory chancellor Ken Clarke said the shadow chancellor had “made a perfectly sensible comment” about a possible fall in the value of sterling if government policy became too reckless.

But some MPs suggested that the shadow chancellor could find himself in serious trouble if the pound plunges when currency markets open again on Monday.

Mr Osborne has remained defiant, arguing that Britain was already witnessing “the largest fall in the pound in modern British history”.

He added: “Now behind-the-scenes spinning from the prime minister and his entourage in America is fuelling speculation that the government is planning to borrow recklessly for a big unfunded tax con.

“That will leave the British people with higher debts and higher taxes in years to come.”

However, he said Mr Brown’s policies were “one of the reasons” rather than the sole cause of the pound’s fall, and did not repeat his prediction of a sterling collapse.

Political polls

Mr Osborne’s comments reveal a deepening political divide over how to tackle the economic downturn.

The BBC’s political editor Nick Robinson said Mr Brown will try to use the G20 summit to present Britain as leading the world and portray the opposition party as isolated.

A Sunday Times poll suggests the prime minister’s handling of the economic crisis is going down well with the British public.

Research by YouGov showed the Tory lead over Labour at its lowest this year.

It also suggested the prime minister and Alistair Darling were more trusted to deal with the economic situation than Mr Cameron and Mr Osborne, by a margin of 36% to 25%.

However, there was better news for the Tories in a poll for the Independent on Sunday.

The research by ComRes indicated they had stretched their lead by three points to 11% over the past month.

The Conservatives were on 43%, Labour was up a point on 31%, while the Liberal Democrats were down 4% on 12%.

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This article is from the BBC News website. © British Broadcasting Corporation