U.K. Prime Minister David Cameron said his government will continue with its deficit-cutting plans amid calls from opposition lawmakers for a rethink as the economy struggles to recover from a double-dip recession.
“We’ve cut the deficit by a quarter already, and we are sticking to this course: rejecting the easy path; restoring sanity to our finances,” Cameron wrote in an opinion column published today in the Mail on Sunday newspaper.
“We’re on a hard road to balancing Britain’s books” and “you cannot borrow your way out of a debt crisis,” he said.
With Britain struggling to climb out of its second slump in three years, calls for the government to do more to spur the economy have intensified as the largest budget reductions since World War II and the euro-area debt crisis hurt demand.
While stopping short of saying he will fund new infrastructure, Chancellor of the Exchequer George Osborne said today the government will announce proposals to guarantee investment finance and is overhauling planning laws to accelerate the approval of projects.
“We’ll have a specific piece of legislation published next week so that government can use the low interest rates we’ve earned by being tough on the deficit to help underwrite construction projects, including housing,” Osborne said in a television interview on the BBC’s “Andrew Marr Show.”
The government is doing “all these things to get the economy moving, to make sure that the jobs we’re already creating in this economy continue to be created,” he said.
Borrowing Costs
The chancellor has resisted demands to ease the pace of his fiscal squeeze, saying his plans have helped to insulate Britain from debt turmoil emanating from the euro-area.
Based on 10-year government bond yields, the U.K. pays 1.46 percent to borrow compared with 2.65 percent in October last year.
The rates are 6.86 percent for Spain and 5.83 percent for Italy. The government said it will announce legislation this week to guarantee as much as 40 billion pounds ($63.5 billion) of infrastructure investment, as well as proposals for guarantees worth up to 10 billion pounds to boost homebuilding.
Further aid will follow this with a new economy bill, including the action to speed up the planning process. Osborne also said officials are working on creating a state-backed bank to lend to small businesses.
“The weakness in our banking system is one of the biggest problems we’ve got,” he said. “We do need to actively consider now, and actively work on as we are in the Treasury, a small business bank sponsored by the government. Small businesses are the innocent victims of the financial crash.”
‘Unusually Uncertain’
The comments come after the Confederation of British Industry and the British Chambers of Commerce both urged the government to act to foster growth as they forecast the economy will contract this year.
The Bank of England in August abandoned its forecast of growth this year and said the outlook is “unusually uncertain” after the economy shrank 0.5 percent in the three months through June. Gauges of manufacturing and services fell in July, indicating a weak start to the third quarter.
With tax receipts slowing in the face of the deteriorating outlook, Osborne will miss the Office for Budget Responsibility’s deficit-reduction forecasts until 2015, according to the chambers of commerce.
Chuka Umunna, the opposition Labour Party’s head business spokesman, said they would welcome a move by the government to speed up infrastructure projects.
“We would give an immediate boost to the economy,” Umunna said in an interview on the Marr show. “Unless you get people back into work, you can’t reduce your borrowing figures.”
No Easy Route
Osborne said today that he would ask his critics to support the government in making it easier to spur investment. “We are getting on top of the deficit,” Osborne said.
“Britain’s economic problems are deep rooted, built up over many years. If there was a quick fix, or an easy road, I would be the first on it. There is no alternative easy road.”
“There is no simple alternative,” U.K. Business Secretary Vince Cable, a member of the Liberal Democrats, the coalition’s junior partner, said in an interview on BBC Radio 4 today.
“The way we have approached this is to make sure the government’s finances are in order so the Bank of England then has confidence to give stimulus through monetary policy. We’ve got to continue to work on that combination of things.”
Poll Pain
The budget cuts have undermined voter support for Cameron’s coalition government. In a YouGov Plc poll published in the Sunday Times today, Cameron’s Conservative Party had the support of 35 percent of voters, with Labour at 41 percent.
The survey, which questioned 1,739 Britons in the two days through Aug. 31, showed support for the Liberal Democrats at 9 percent. In an attempt to get his administration back on track, the prime minister is planning to reorganize his ministerial team after his summer break.
U.K. Foreign Secretary William Hague said today that the reorganization will happen soon and declined to speculate on potential changes. “The reshuffle is not far away,” Hague said in a television interview on Sky News today.
“The answers to these things will soon be apparent. Whatever happens in the coming reshuffle, it will be a reinvigorated team.”
The reorganization comes as the annual political-party conference season is about to start and tensions were stoked in the coalition after Deputy Prime Minister Nick Clegg, a member of the Liberal Democrats, called for higher taxes on Britain’s wealthiest.
Cable said today that his party will continue to make the case for higher levies on wealth. “I am the chancellor who has increased taxes on the rich,”
Osborne told the BBC today. “But we’ve also got to be careful going forward that we do not drive away wealth creators from this country.”
“We’ve cut the deficit by a quarter already, and we are sticking to this course: rejecting the easy path; restoring sanity to our finances,” Cameron wrote in an opinion column published today in the Mail on Sunday newspaper.
“We’re on a hard road to balancing Britain’s books” and “you cannot borrow your way out of a debt crisis,” he said.
With Britain struggling to climb out of its second slump in three years, calls for the government to do more to spur the economy have intensified as the largest budget reductions since World War II and the euro-area debt crisis hurt demand.
While stopping short of saying he will fund new infrastructure, Chancellor of the Exchequer George Osborne said today the government will announce proposals to guarantee investment finance and is overhauling planning laws to accelerate the approval of projects.
“We’ll have a specific piece of legislation published next week so that government can use the low interest rates we’ve earned by being tough on the deficit to help underwrite construction projects, including housing,” Osborne said in a television interview on the BBC’s “Andrew Marr Show.”
The government is doing “all these things to get the economy moving, to make sure that the jobs we’re already creating in this economy continue to be created,” he said.
Borrowing Costs
The chancellor has resisted demands to ease the pace of his fiscal squeeze, saying his plans have helped to insulate Britain from debt turmoil emanating from the euro-area.
Based on 10-year government bond yields, the U.K. pays 1.46 percent to borrow compared with 2.65 percent in October last year.
The rates are 6.86 percent for Spain and 5.83 percent for Italy. The government said it will announce legislation this week to guarantee as much as 40 billion pounds ($63.5 billion) of infrastructure investment, as well as proposals for guarantees worth up to 10 billion pounds to boost homebuilding.
Further aid will follow this with a new economy bill, including the action to speed up the planning process. Osborne also said officials are working on creating a state-backed bank to lend to small businesses.
“The weakness in our banking system is one of the biggest problems we’ve got,” he said. “We do need to actively consider now, and actively work on as we are in the Treasury, a small business bank sponsored by the government. Small businesses are the innocent victims of the financial crash.”
‘Unusually Uncertain’
The comments come after the Confederation of British Industry and the British Chambers of Commerce both urged the government to act to foster growth as they forecast the economy will contract this year.
The Bank of England in August abandoned its forecast of growth this year and said the outlook is “unusually uncertain” after the economy shrank 0.5 percent in the three months through June. Gauges of manufacturing and services fell in July, indicating a weak start to the third quarter.
With tax receipts slowing in the face of the deteriorating outlook, Osborne will miss the Office for Budget Responsibility’s deficit-reduction forecasts until 2015, according to the chambers of commerce.
Chuka Umunna, the opposition Labour Party’s head business spokesman, said they would welcome a move by the government to speed up infrastructure projects.
“We would give an immediate boost to the economy,” Umunna said in an interview on the Marr show. “Unless you get people back into work, you can’t reduce your borrowing figures.”
No Easy Route
Osborne said today that he would ask his critics to support the government in making it easier to spur investment. “We are getting on top of the deficit,” Osborne said.
“Britain’s economic problems are deep rooted, built up over many years. If there was a quick fix, or an easy road, I would be the first on it. There is no alternative easy road.”
“There is no simple alternative,” U.K. Business Secretary Vince Cable, a member of the Liberal Democrats, the coalition’s junior partner, said in an interview on BBC Radio 4 today.
“The way we have approached this is to make sure the government’s finances are in order so the Bank of England then has confidence to give stimulus through monetary policy. We’ve got to continue to work on that combination of things.”
Poll Pain
The budget cuts have undermined voter support for Cameron’s coalition government. In a YouGov Plc poll published in the Sunday Times today, Cameron’s Conservative Party had the support of 35 percent of voters, with Labour at 41 percent.
The survey, which questioned 1,739 Britons in the two days through Aug. 31, showed support for the Liberal Democrats at 9 percent. In an attempt to get his administration back on track, the prime minister is planning to reorganize his ministerial team after his summer break.
U.K. Foreign Secretary William Hague said today that the reorganization will happen soon and declined to speculate on potential changes. “The reshuffle is not far away,” Hague said in a television interview on Sky News today.
“The answers to these things will soon be apparent. Whatever happens in the coming reshuffle, it will be a reinvigorated team.”
The reorganization comes as the annual political-party conference season is about to start and tensions were stoked in the coalition after Deputy Prime Minister Nick Clegg, a member of the Liberal Democrats, called for higher taxes on Britain’s wealthiest.
Cable said today that his party will continue to make the case for higher levies on wealth. “I am the chancellor who has increased taxes on the rich,”
Osborne told the BBC today. “But we’ve also got to be careful going forward that we do not drive away wealth creators from this country.”
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