Britain defends deficit plan despite borrowing figures
Deputy Prime Minister Nick Clegg insisted on Wednesday that the British government would stick with its plan to slash the budget deficit despite a sharp hike in state borrowing.
Clegg admitted the recovery from a long and deep recession was "fragile", but said that major cuts to public spending designed to eliminate the deficit by 2015 had laid the "foundations for growth".
Shortly before he spoke to his Liberal Democrat party, however, new official figures revealed that state borrowing continues to hit new records despite the government's austerity drive, the toughest among the big European Union nations.
Public sector net borrowing surged to £15.9 billion (18.2 billion euros, $25 billion), the highest level for August since records began 18 years ago, and a significant increase on the £14 billion of August 2010.
It raises further questions about the government's target to reduce the deficit in the financial year to April to £122 billion, which many experts already believed would be hard to reach.
In another blow, the International Monetary Fund downgraded its forecasts for Britain on Tuesday, predicting growth of 1.1 percent this year and 1.6 percent in 2012, compared to its previous guidance of 1.7 and 2.3 percent respectively.
The figures have fuelled criticism from the opposition Labour party that the government spending cuts are choking off economic growth.
"If you cut spending and raise taxes too far and too fast you get into a vicious circle," said Labour lawmaker Angela Eagle.
"That's because if you choke off the recovery and put tens of thousands of people on the dole, claiming benefits rather than paying taxes, then it's harder to get the deficit down."
Clegg used his keynote speech to the Lib Dems' annual conference in Birmingham, central England, to defend the deficit-reduction plan, although he acknowledged that more needed to be done to promote growth.
"Right now, our biggest concern is of course the economy. The recovery is fragile. Every worker, every family knows that. There is a long, hard road ahead," he told delegates.
He said: "It is clearer now than ever that deficit reduction was essential to protect the economy, to protect homes and jobs. Deficit reduction lays the foundations for growth."
But he conceded that "on its own, it is not enough" and highlighted plans to speed up major infrastructure projects, cut red tape, boost apprenticeships and increase bank lending to help boost growth.
"So we need to do more, we can do more, and we will do more for growth and for jobs," Clegg said.
© 2011 AFP