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| Version 1 | Version 2 |
|---|---|
| Darling to reassure on borrowing | Darling to reassure on borrowing |
| (about 2 hours later) | |
| Chancellor Alistair Darling is to offer reassurance that the government will not borrow irresponsibly because of the global financial downturn. | Chancellor Alistair Darling is to offer reassurance that the government will not borrow irresponsibly because of the global financial downturn. |
| In his annual address to the Cass Business School, Mr Darling is also expected to call for more international regulation of the banking system. | In his annual address to the Cass Business School, Mr Darling is also expected to call for more international regulation of the banking system. |
| "Just as markets change, so should policy," he will say. | "Just as markets change, so should policy," he will say. |
| Shadow chancellor George Osborne is calling for a significant cut in interest rates to stimulate demand. | |
| With the government planning to increase borrowing in the face of an expected recession, the chancellor will say fiscal policy must support efforts to shore up the economy. | |
| 'New approaches' | |
| "Today, governments all over the world are using approaches that had until recently been consigned to policy making history, but it is natural that the conduct of policy should evolve," Mr Darling will say. | |
| "Three weeks ago, we worked with other countries to put in place a plan to stabilise the banking system. | "Three weeks ago, we worked with other countries to put in place a plan to stabilise the banking system. |
| "These countries are committed to working together to strengthen supervision in the global financial system. | "These countries are committed to working together to strengthen supervision in the global financial system. |
| We have got a lot to do and to make sure we can do it wisely is a hell of a challenge Sir George Cox Former head, Institute of Directors | |
| "And today we need the same determination to support the wider economy. To ensure that fiscal policy supports monetary policy, here and across the world, in these exceptional circumstances." | "And today we need the same determination to support the wider economy. To ensure that fiscal policy supports monetary policy, here and across the world, in these exceptional circumstances." |
| Shadow chancellor George Osborne writes in the Daily Telegraph that the scrapping of Gordon Brown's fiscal rules would destroy "the final remaining pillar" of his economic legacy. | Shadow chancellor George Osborne writes in the Daily Telegraph that the scrapping of Gordon Brown's fiscal rules would destroy "the final remaining pillar" of his economic legacy. |
| And the Tories warn that any "spending splurge" would further damage Britain's economic outlook and reduce the opportunity for interest rate cuts. | And the Tories warn that any "spending splurge" would further damage Britain's economic outlook and reduce the opportunity for interest rate cuts. |
| 'Out of control' | |
| The Tories have claimed that borrowing levels - which totalled £37.6bn between April and September - are already "out of control". | |
| They maintain that further increases in borrowing would not be a panacea for the economy but a reflection of the chancellor's need to plug a widening gap in his finances with tax revenues falling and unemployment costs rising. | |
| While accepting that it may be "necessary" to borrow more in an economic downturn, the Lib Dems have said the government must demonstrate it has a plan to rebalance the public finances once the economy starts growing again. | |
| The BBC's political editor Nick Robinson said that while Mr Darling may quietly concede that existing fiscal rules are at an end, he will say a future framework for borrowing and debt levels will still be responsible. | |
| Suggestions that the government will pursue large public works projects to support spending and employment during the downturn have been criticised by some experts. | |
| A group of leading economists have described the "Keynesian" philosophy - named after the economist John Maynard Keynes - as "misguided and discredited" amid concerns it could harm the private sector which they believe should lead the economy recovery. | |
| Sir George Cox, the former head of the Institute of Directors, said it would require an injection of about £50bn into the economy - equivalent to about 3% of annual GDP - to really make a difference. | |
| "We have got a lot to do and to make sure we can do it wisely is a hell of a challenge," he told the BBC. | |
| Mr Darling would seek to "pour a little cold water" on talk of a full return to Keynesian economics, the BBC's Nick Robinson added. | |
| He will point out that the economist argued that spending should not be cut in a downturn, not that it should be allowed to "let rip". |