7 Oct 2011

Turf war clash on credit easing plan

Why isn’t the credit easing plan ready, George Osborne was asked earlier on Radio 4 by Stephanie Flanders. If not, why not?

He didn’t answer and the reason I hear is that a certain amount of pride and demarcation lies behind the delay.

I mentioned this on the programme earlier in the week, and I understand that there was a moment to start getting these plans worked up last autumn when Cabinet Secretary Sir Gus O’Donnell suggested in a memo to other senior officials that government needed to have plans ready if things were worse than predicted.

Among those plans would have been how exactly you go about credit easing. What happened? The Treasury permanent secretary waded in furious at the cabinet secretary’s memo, the chancellor dragged in the prime minister to get his tanks off his lawn and the whole idea was put back in its box.

George Osborne said he knew British banks including RBS would be downgraded, news that came through while he was on air on Radio 4.

I hear that he takes the view that RBS is going to have to be broken down and restructured before very long because the sickly bits are worse than people thought (The FT splashes on fears that RBS needs more government cash).

He doesn’t, I hear, think that rules out selling off some of the better bits in packages before 2015. Though after Mervyn King’s talk of us heading for theĀ  1930s or worse, nothing much feels certain right now.

Pictured: Welcome to the new economic times – handrail removed overnight in Hammersmith subway by scrap metal thieves.

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