We reported yesterday that the OECD was sounding alarm over the UK’s growth slowing down

Later in the day the OECD’s spokesperson went on Sky News to try and back-track on what they said earlier. Typically, right-wingers did not miss a chance to crow about it.

But what did the OECD’s Pier Carlo Padoan say in his interview with The Times?

They have now released a transcript of the interview.

They key point here isn’t that they’re back-tracking on the cuts (welcome though as that is) but that they’re also alarmed that UK’s growth is slowing down unexpectedly.

And why has it slowed down so much? We said it months ago: that cuts would threaten our nascent economic recovery. And now its turning out to be true.

Full transcript

Q The OECD has been very supportive of the fiscal consolidation plans in the UK. Do you worry that they are going to bear down too hard on growth? I see you have taken your growth forecasts down again, from 1.7 to 1.4 per cent.

A We are incorporating new evidence. We are also saying that fiscal consolidation should be pursued, but at the same time we see merit in slowing the pace of fiscal consolidation if there is not so good news on the growth front, and we have seen good and bad news recently. So we not are saying just stick to it, we are saying take that into account. Especially given the fact that maybe monetary policy has less of a policy space to use because of the headline inflation story. So we fully recognize that in this transition phase while moving towards fiscal consolidation, which is needed because of the size of the deficit, that [the] pace of that could be modulated with respect to the performance results.

Q But even if that means potentially meeting fiscal targets a year later? Is that a worthwhile sacrifice to make in a sense?

A That is an intertemporal trade off. I would not say specifically a year later, I would say that you can slow down the pace over the next quarters, if things turn out to be weaker than expected.

Q But you are saying things are going to turn out weaker than expected because your growth forecasts are lower than the official forecasts.

A We have seen that they are a bit weaker than expected; should that continue to be the case then there is scope for, as I said, slowing the pace.

Q Does that mean slower cuts or reversing tax hikes? What’s the right way for a country in this situation to slow the pace of fiscal consolidation?

A I would not reverse the measures I have announced because that would bear down on credibility; I would slow down the pace of spending cuts rather.

Reader comments

1. Liberal Conspiracy

   OECD caught back-tracking on cuts agenda http://bit.ly/kuhEgA

2. Brian Moylan

   RT @libcon: OECD caught back-tracking on cuts agenda http://bit.ly/kuhEgA #oecd #cuts #ukpolitics

3. Jose Aguiar

   OECD caught back-tracking on cuts agenda http://bit.ly/kuhEgA

4. sunny hundal

   @davidbengeob i'm shocked that right-wing orgs agree with a right-wing leader. PS, on the OECD http://bit.ly/kuhEgA – WAKE UP

5. sunny hundal

   @davidbengeob i'm shocked that right-wing orgs agree with a right-wing leader. PS, on the OECD http://bit.ly/kuhEgA – WAKE UP

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