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27/10/2008
Prime Minister Defends Higher Borrowing Plans
Britain's Prime Minister has defended plans to increase Government borrowing in order to head off the worst of the current financial crisis.
Responding to criticism of Britain's plans to "spend" its way out of the economic downturn, Prime Minister Gordon Brown has insisted higher borrowing is the "responsible" thing to do.
The PM has come under attack for plans to borrow to fend off the recession and tackle the economic downturn, with senior economists warning he has already committed the country to high debt levels.
However, speaking to business leaders today at Imperial College London, Mr Brown said the government was acting in a "responsible" manner to increase spending at this time to "support economic activity".
He added: "We will and can allow borrowing to rise and help restore demand and to come to the aid of workers, businesses and homeowners.
"We have already combined targeted support through the tax system - such as the temporary increase in stamp duty thresholds, the freeze in fuel duty and the £120 tax rebate for basic-rate taxpayers - with a commitment to maintain the necessary government investment to enable Britain to benefit from the upturn."
Mr Brown continued: "Through our actions we are both supporting families and businesses now and helping them prepare for the future. That is why the responsible course is to borrow now to maintain growth and output and to reduce borrowing as a proportion of GDP as the economy recovers and tax receipts rise again."
A group of senior economists, however, have criticised the Government's "misguided and discredited" plans, and have instead recommended tax cuts as an alternative.
Mr Brown's comments came during further drops in the worldwide stock markets, as the FTSE 100 index fell almost 4% in London, and news house prices in the UK will not reach the levels they peaked at last year, until 2013.
(JM)
Responding to criticism of Britain's plans to "spend" its way out of the economic downturn, Prime Minister Gordon Brown has insisted higher borrowing is the "responsible" thing to do.
The PM has come under attack for plans to borrow to fend off the recession and tackle the economic downturn, with senior economists warning he has already committed the country to high debt levels.
However, speaking to business leaders today at Imperial College London, Mr Brown said the government was acting in a "responsible" manner to increase spending at this time to "support economic activity".
He added: "We will and can allow borrowing to rise and help restore demand and to come to the aid of workers, businesses and homeowners.
"We have already combined targeted support through the tax system - such as the temporary increase in stamp duty thresholds, the freeze in fuel duty and the £120 tax rebate for basic-rate taxpayers - with a commitment to maintain the necessary government investment to enable Britain to benefit from the upturn."
Mr Brown continued: "Through our actions we are both supporting families and businesses now and helping them prepare for the future. That is why the responsible course is to borrow now to maintain growth and output and to reduce borrowing as a proportion of GDP as the economy recovers and tax receipts rise again."
A group of senior economists, however, have criticised the Government's "misguided and discredited" plans, and have instead recommended tax cuts as an alternative.
Mr Brown's comments came during further drops in the worldwide stock markets, as the FTSE 100 index fell almost 4% in London, and news house prices in the UK will not reach the levels they peaked at last year, until 2013.
(JM)
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