By Lucy Phillips
28 April 2010
The political and economic risks of a hung Parliament are being overstated, according to a think-tank close to Whitehall.
As the polls continue to indicate that this is the most likely outcome of the May 6 election, the two main parties sought to dampen the surge in public support for the Liberal Democrats.
The Conservatives in particular this week stepped up their campaign against a hung Parliament. Shadow chancellor George Osborne warned such an outcome would ‘paralyse’ the economy, risking a run on the pound, a credit rating downgrade and hikes in interest rate.
He also argued that it would lead to ‘an awful lot of horse trading and arguments’, delaying vital decisions on dealing with the public deficit.
Business leaders also weighed in with their concerns. British Chambers of Commerce director-general David Frost said: ‘With our economy still fragile and the public finances in a dire state, the overwhelming concern is whether a hung Parliament will provide decisive action around the UK’s unsustainable deficit.’
But Akash Paun, senior researcher at the Institute for Government, an independent think-tank that advises ministers and civil servants, told Public Finance that all the major parties ‘recognised the extent of the challenge around fiscal consolidation’. This suggested there were ‘signs that the politicians would be able to work it out between themselves’.
He said France, Greece and Malta were the only other countries in the European Union with majority governments and they were ‘not necessarily the ones we would look to for the most effective management of government or public finances'.
Paun added: ‘There is not a dispute about the general scale of the problem. The differences are about how quickly to make some of the cuts or where to target them.
‘My view is not that everything is going to be easy but there’s no reason why our system and politicians cannot adapt to the new combination if that were to arise. It works effectively elsewhere.’
28 April 2010
The political and economic risks of a hung Parliament are being overstated, according to a think-tank close to Whitehall.
As the polls continue to indicate that this is the most likely outcome of the May 6 election, the two main parties sought to dampen the surge in public support for the Liberal Democrats.
The Conservatives in particular this week stepped up their campaign against a hung Parliament. Shadow chancellor George Osborne warned such an outcome would ‘paralyse’ the economy, risking a run on the pound, a credit rating downgrade and hikes in interest rate.
He also argued that it would lead to ‘an awful lot of horse trading and arguments’, delaying vital decisions on dealing with the public deficit.
Business leaders also weighed in with their concerns. British Chambers of Commerce director-general David Frost said: ‘With our economy still fragile and the public finances in a dire state, the overwhelming concern is whether a hung Parliament will provide decisive action around the UK’s unsustainable deficit.’
But Akash Paun, senior researcher at the Institute for Government, an independent think-tank that advises ministers and civil servants, told Public Finance that all the major parties ‘recognised the extent of the challenge around fiscal consolidation’. This suggested there were ‘signs that the politicians would be able to work it out between themselves’.
He said France, Greece and Malta were the only other countries in the European Union with majority governments and they were ‘not necessarily the ones we would look to for the most effective management of government or public finances'.
Paun added: ‘There is not a dispute about the general scale of the problem. The differences are about how quickly to make some of the cuts or where to target them.
‘My view is not that everything is going to be easy but there’s no reason why our system and politicians cannot adapt to the new combination if that were to arise. It works effectively elsewhere.’
