Britain’s deputy prime minister, Liberal Democrat leader Nick Clegg told delegates at his annual party conference in Birmingham on Wednesday there was no turning back from the coalition government’s fiscal austerity program despite figures showing government borrowing in August reached a record high for the month.
Earlier on Wednesday the Office for National Statistics said UK government net borrowing excluding financial interventions rose by 1.9 billion pounds ($3 billion)to 15.934 billion pounds in August from 14.003 billion pounds a year ago, above analysts' forecasts of 13.2 billion pounds and a record high for the month.
Clegg, who has seen his own personal popularity in opinion polls collapse since he allied his political party with the Conservatives, led by David Cameron, following the inconclusive result of the UK’s general election last year, told delegates: “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 on its own it is not enough. That’s why we’re already: investing in infrastructure, reducing red tape, promoting skills, getting the banks lending.”
The release of the speech at 11:30 (BST) may have been responsible for a BBC report that followed suggesting the government would increase spending by 5 billion pounds.
This was, however, denied by the Treasury which said the UK’s Conservative finance minister George Osborne remained committed to spending cuts.
The Lib Dem leader’s speech also comes a day after the International Monetary Fund (IMF) lowered its gross domestic product (GDP) growth forecast for the UK from 1.7 percent in 2011 to 1.1 percent. The IMF warned the government fiscal austerity would be enough of a policy response on its own and said policy makers in Britain and around the world needed a "Plan B".
Acknowledging the economic concerns of the IMF, Clegg admitted the outlook for the global economy was worse than a year ago. “So we need to do more, we can do more, and we will do more for growth and for jobs,” he said.
Having appeared to take the blame for many of the coalition government’s more unpopular policies, such as the rise in university tuition fees, he Lib Dem leader was keen to illustrate his party’s positive influence on government policy arguing: “We are here to build a new economy. A new economy safe from casino speculation. That’s why a Liberal Democrat business secretary is putting a firewall into the banking system.”
Clegg said the government would protect those “who have worked hard and saved”. He also pointed to the government’s policy to create the world’s first “green investment bank” which would spend 3 billion pounds to create jobs in the clean technology sector.
He also appeared to lend his support to a policy proposal submitted to the government by the think tank Centre for Policy Studies in the Spring, which called for taxpayers to be handed 1,000 pounds in shares in the nationalized banks Royal Bank of Scotland and Lloyd’s Banking Groupsaying: “When we come to sell those bank shares, I want to see a payback to every citizen. Your money was put at risk. Your money was used to bail out the banks. And so the money made by the banks is your money, too.”
The opposition Labour party has urged the government to cut VAT, tax bankers' bonuses and reinstate their school building program to stimulate demand in the economy and create jobs for young people.
However, the Lib Dem leader paid little heed to Labour's calls saying: "Labour says: the government is going too far, too fast. I say, Labour would have offered too little, too late. Imagine if Ed Miliband and Ed Balls had still been in power. Gordon Brown’s backroom boys when Labour was failing to balance the books, failing to regulate the financial markets, and failing to take on the banks. The two Eds, behind the scenes, lurking in the shadows, always plotting, always scheming, never taking responsibility. At this time of crisis what Britain needs is real leadership. This is no time for the back room boys."
Labour will hold its annual conference next week followed by the Lib Dem's coalition partners the Conservative party the following week.