Inflation down, but Moody's alert should be troubling Osborne

GEORGE OSBORNE on the Today programme this morning ruled out any change of economic policy to stimulate more growth, despite the warning by the credit rating agency Moody's that the lack of growth in Britain's economy is putting the country's triple A credit rating in jeopardy.

The Chancellor has escaped a real grilling over the latest Moody's warning because the House of Commons is on its Whitsun break this week. Normally Labour's Ed Balls would have found a way to put the Chancellor on the rack. But the MPs are off skiing with the kids and the Chamber of Horrors is empty.

It didn't help that John Humphrys was off-form this morning. Instead of asking Osborne why his efforts to promote growth are not working, he stuckto his mantra that the Chancellor is anti-business.

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As a result, Osborne, who was not even in the studio, brushed Humphrys aside like a troublesome mouse and emerged grinning like the cat who got the cream.

If he'd been quizzed by Humphrys an hour-and-a-half later, he'd have had even more reason to be smug: the new CPI figures for January, released at 9.30 am, showed inflation down from 4.2 to 3.6, the lowest rate since November 2010. Whether that's good news – or whether it simply shows the British economy is anaemic – remains to be seen.

Humphrys could have asked Osborne why the banks have not met their targets in lending to small businesses. The latest figures show that they were out by at least £1bn on their lending targets. Up and down the country there are firms crying out for finance to expand but still they can't get the money to grow. And what is Osborne doing about it?

Humphrys allowed Osborne to completely ignore the part of Moody's message on growth. Instead, the Chancellor was able to pick from Moody's analysis the bit that suited him - that Britain has to keep getting its debt down.

"It was a reality check for the whole political system that Britain has to deal with its debt," he said. "Here is yet another credit rating agency warning Britain that if we spend or borrow too much we are going to lose our credit rating and what that leads to is a loss of investor confidence."

The truth is Osborne, when he is at the Treasury, is looking desperately for means of injecting more growth in the economy in his forthcoming Budget without resorting to the solutions put forward by Ed Balls, such as reversing the Tory increase in VAT by two per cent.

The Lib Dems are pushing hard for a cut in the lower rate of tax, by raising thresholds up to £12,000. At least that would have the benefit of putting money in the pockets of the poor who are prepared to spend it rather than save it.

What does Osborne think about that? We will never know. Humphrys never asked him.