CONSERVATIVE PLANS to cut public spending rapidly would threaten economic recovery, British prime minister Gordon Brown has declared, as leading economists were divided on the best course of action.
Speaking in London, Mr Brown said: “The great myth the right are spreading through their friends in the press is that government caused this crisis and that government spending is prolonging it.
“But what caused this crisis was unfettered markets which imploded and destroyed growth. The last two years have exposed free market fundamentalism, destroyed the idea that the private sector working badly is inherently better than the public sector working well,” he said.
Nervousness about the state of Britain’s economy has heightened following a collapse in January tax figures – it is usually one of the year’s highest-grossing months – and weak retail spending figures.
If the graph continues downwards, the next set of British economic statistics could show the United Kingdom – which is likely to have a general election in May – back in recession just months after it returned to weak growth.
Economists have taken sharply differing positions about the government’s best course of action in recent days, with a significant group backing Mr Brown’s belief that cuts must happen, but not this year.
Responding, Mr Brown emphasised that he, if returned to power, would make heavy spending cuts in time.
“We have been crystal clear that we will halve the deficit over the next four years – indeed more than halve it,” he said.
Taxes will rise and some programmes will have to be cut, but the fall in tax revenues must first be countered by a sustained return to growth and a rise in employment, he told a conference of European centre-left leaders in London.
“Instead of helping the recovery in our country, Conservative dislike bordering hatred of government action would risk the recovery now,” said Mr Brown, citing in support a public letter from 60 economists.
“They are using the cloak of action on debt to conceal the hard fact that their real position is that they remain wedded – as they have always been – to an ideology that would always make government the problem and deny people the helping hand that government can be.”
In a speech in Coventry tomorrow, the prime minister will lay out a number of Labour’s key manifesto pledges – which some have seen as leaving open the option that he could go to the country before the expected May 6th election date.
In that speech, Mr Brown will say that while “we will reduce the deficit, we must protect and not cut frontline services”.
He will stress that Labour is the only party that “will make the right choices to equip Britain for the future”.
The UK’s budget deficit could exceed 12 per cent of gross domestic product this year – comparable to the figure in Greece, and raising fears that international borrowing costs could soar.
Meanwhile, a former Labour cabinet minister, James Purnell, who led an attempt to oust Mr Brown as prime minister last year, has announced that he will quit the House of Commons at the election.