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Www.Guardian.Co.Uk - George Osbourne today dismissed criticism that he lacked judgment in predicting a run on the pound, insisting it was his job to tell "the truth about the British economy".The shadow Chancellor was forced to defend himself after Labour aides and small business organisations accused him of talking down sterling despite a convention that politicians do not predict currency collapses. Kenneth Clarke, the man some MPs now want to replace Osborne, had to ride to his rescue, insisting his words were "perfectly sensible".In an interview in yesterday's Times, Osborne warned that excessive government borrowing to shore up the economy meant there was a risk of "a proper sterling collapse, a run on the pound".Labour officials said it was "unbelievable" that Osborne would discuss the weakness of sterling at such a sensitive time, arguing that his remarks could be the catalyst for a run on the pound that would make it harder for the Bank of England to cut interest rates. "What he said could result in the very outcome he was warning about," said a senior government official.Stephen Alambritis from the Federation of Small Businesses warned: "It is important that politicians rally together at times like these and do not use terms like 'run on the pound'."Asked about his actions on this morning's Andrew Marr show on BBC1, Osborne rejected the criticism."My job as shadow chancellor is to tell the British people the truth about the British economy. The truth that it is the worst prepared economy in the world for recession," he said."The truth that we have got the highest personal debt in the world. The truth that the pound has fallen by a record amount against other currencies."I am telling the public the truth and that is the job of elected politicians, particularly opposition politicians, in difficult times."Asked whether he felt secure in his position given that the Tory leader, David Cameron, had failed so far to publicly support him on the issue, Osborne said: "I feel absolutely sure that I am doing the right thing now, making the right calls on the economy."Osborne made his comments on the pound as Gordon Brown used his appearance at an international economic summit in Washington to showcase what is expected to be a multi-billion-pound package of tax cuts for low and middle earners, coupled with public spending to kick-start the economy.The Conservatives, Osborne said this morning, were "totally serious about fiscal responsibility, about not taking risks with public money, about not storing up a mountain of debt and a tax bombshell that will damage out economy in the future".With a YouGov poll for today's Sunday Times showing that the Tory lead over Labour has narrowed to five points, its lowest in comparable polls this year, the shadow Chancellor's future could depend on the currency markets. If the pound - which sank to a 13-year low on Friday - plummets further this week he risks being blamed.Brown, who hinted that people could start feeling the benefit of his fiscal package even before Christmas, dismissed claims it would damage the economy, although he avoided discussing any impact on sterling. "People are looking to politicians to be responsible and to show leadership," he said.After the Washington summit of 20 nations, the Prime Minister said: "There was widespread agreement that at a time like this when the world faces huge uncertainty ... this is the time you need to support our economies."Plans under consideration to inject cash into the ailing economy and help the victims of a downturn include proposals to build more council housing to help those who have their homes repossessed. Figures this week from the Council of Mortgage Lenders are expected to show another sharp rise in repossessions, while Whitehall officials estimate evictions by banks will add 9,000 people to council-house waiting lists this year.The falling pound is a concern because it creates pressure to keep interest rates high and makes commodities priced in dollars more expensive to import. It is also a sign of dwindling investor confidence in a country.Clarke insisted last night that there was no convention preventing politicians discussing currency movements: "The foreign exchange markets had already made their minds up about the pound, regardless of any political comment. Gordon Brown reminds me of Harold Wilson blaming the weakness of sterling on people 'selling the pound short' when it had already been weakened by his government's own policies."However the row has not helped Osborne's reputation, already weakened by the controversial meetings with Russian oligarch Oleg Deripaska and the lukewarm reception for his own economic proposals. Yesterday Tory party donor Lord Kalms, a supporter of former shadow Home Secretary David Davis, demanded that Osborne be replaced as shadow Chancellor by Davis.George OsborneGordon BrownEconomic policyConservativesCurrenciesInterest ratesCredit crunchguardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds George Osborne claims UK economy is 'worst prepared' in world for recession | Politics | guardian.co.uk {...} Shadow chancellor says UK economy is 'worst prepared' in world for recession, as row over sterling claims continues {...} Published: November 16, 2008, 11:14 am - Indexed: November 16, 2008, 12:15 pm - Page Size: 95KB |