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Brown defending higher borrowing Brown defending higher borrowing
(40 minutes later)
Gordon Brown is defending his plans to increase government borrowing in order to tackle the economic downturn in a speech in London. Gordon Brown has defended his plans to increase government borrowing in order to tackle the economic downturn.
The prime minister is telling business leaders it is the right time to boost demand with government spending. The prime minister told business leaders it was "responsible" for government to boost spending at this time to "support economic activity".
Opposition parties have attacked the current levels of debt, saying Britain is inadequately prepared for recession.Opposition parties have attacked the current levels of debt, saying Britain is inadequately prepared for recession.
Leading economists have also criticised the government over its spending plans and called for tax cuts instead.Leading economists have also criticised the government over its spending plans and called for tax cuts instead.
'Misguided' strategy'Misguided' strategy
In a letter to a Sunday newspaper, a number of economists warned against an expansion of government spending as a way of stimulating the economy.In a letter to a Sunday newspaper, a number of economists warned against an expansion of government spending as a way of stimulating the economy.
They described a focus on public works projects and higher spending as "misguided and discredited".They described a focus on public works projects and higher spending as "misguided and discredited".
The latest quarterly public debt figures hit a record £37.6 billion - higher than the whole of the previous year.The latest quarterly public debt figures hit a record £37.6 billion - higher than the whole of the previous year.
The responsible course is to borrow now to maintain growth and output Gordon Brown Keynesian theory explainedThe responsible course is to borrow now to maintain growth and output Gordon Brown Keynesian theory explained
In his speech in London, Mr Brown will say fiscal policy will be used to kick-start the economy and a temporary increase in borrowing is the right strategy to pursue. In a speech in London, Mr Brown said fiscal policy would be used to kick-start the economy and a temporary increase in borrowing was the right strategy to pursue.
He is expected to say: "We will and can allow borrowing to rise to help restore demand and to come to the aid of workers, businesses and homeowners. It was right to increase government spending to bolster the economy and to "help people through difficult times", he argued.
"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. He added that when the economy began to recover and tax revenues increased, borrowing levels as a share of economic output would then come down.
"Through our actions we are both supporting families and businesses now and helping them prepare for the future. Mr Brown defended government measures to support the faltering economy including help for small businesses and homeowners to stave off the threat of repossessions.
"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." "I can see why people are insecure and worried about their future," he said.
Welfare reformWelfare reform
The speech comes on the day incapacity benefit is replaced by a new allowance aimed at getting one million people off benefits.The speech comes on the day incapacity benefit is replaced by a new allowance aimed at getting one million people off benefits.
Gordon Brown on the Politics Show ScotlandGordon Brown on the Politics Show Scotland
Mr Brown will say welfare reform will be intensified despite the economic climate. Mr Brown said welfare reform would be intensified despite the economic climate, saying that it would help people into new jobs.
"The very moment in an economic downturn when we need to invest in human capital is no time to slow down welfare reform," he will add. "The very moment in an economic downturn when we need to invest in human capital is no time to slow down welfare reform," he said.
Over the weekend, Mr Brown paid a brief visit to Glenrothes in Scotland as part of a by-election campaign and made predictions food and fuel bills would begin to come down next year.Over the weekend, Mr Brown paid a brief visit to Glenrothes in Scotland as part of a by-election campaign and made predictions food and fuel bills would begin to come down next year.
He also hinted falling oil prices could lead to further co-ordinated interest rate cuts.He also hinted falling oil prices could lead to further co-ordinated interest rate cuts.
"Now inflation is actually coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, round the world to make a decision about interest rates," he told the BBC."Now inflation is actually coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, round the world to make a decision about interest rates," he told the BBC.
Amid growing calls for a further cut in borrowing, Mr Brown said on Monday that it was not "up to him" to tell the Bank of England what to do.
But he added that action on monetary policy did have a "role to play" in helping support the economy.