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Brown defends economy boost plan Brown defends economy boost plan
(about 1 hour later)
Gordon Brown says it is important to act "now" to help people through the downturn - as the Tories say borrowing more will mean higher taxes later on.Gordon Brown says it is important to act "now" to help people through the downturn - as the Tories say borrowing more will mean higher taxes later on.
In a press conference with EC president Jose Manuel Barroso he said almost all countries recognised it was "right" to help people through "difficult times".In a press conference with EC president Jose Manuel Barroso he said almost all countries recognised it was "right" to help people through "difficult times".
Business Secretary Lord Mandelson hinted at tax rises - "adjustments" - having to be made "some years ahead".Business Secretary Lord Mandelson hinted at tax rises - "adjustments" - having to be made "some years ahead".
The Tories say the PM wants to "max out the nation's credit card".The Tories say the PM wants to "max out the nation's credit card".
Chancellor Alistair Darling is widely predicted to unveil a series of tax-cutting measures in his pre-Budget report next week, along with increases in public spending, to create a "fiscal stimulus" to boost the economy.Chancellor Alistair Darling is widely predicted to unveil a series of tax-cutting measures in his pre-Budget report next week, along with increases in public spending, to create a "fiscal stimulus" to boost the economy.
'Necessary action''Necessary action'
But the Conservatives say the tax cuts will be unfunded - paid for by further borrowing, which shadow chancellor George Osborne warned at the weekend could create "a proper sterling collapse".But the Conservatives say the tax cuts will be unfunded - paid for by further borrowing, which shadow chancellor George Osborne warned at the weekend could create "a proper sterling collapse".
Sterling has lost more than a quarter of its value against the dollar and hit a near-record low against the euro, amid fears over the depth of a UK recession. Sterling has lost more than a quarter of its value against the dollar and hit a near-record low against the euro.
Asked whether it was rash to call for more borrowing when taxes would inevitably have to rise later, the prime minister said the priority had to be to "take the necessary action today". On Monday business group the CBI warned that the UK's recession would be tougher and longer than first thought and suggested unemployment could rise from 1.8m to 2.9m by 2010.
We need to focus on the economics here, concentrating on what the government needs to do now in order to make this recession as short and as painless as possible Lord MandelsonBusiness secretary
Asked whether it was rash to call for more borrowing when taxes would inevitably have to rise later, the prime minister said it was "right that we take the necessary action today".
He said many experts supported a fiscal stimulus - which meant "helping families and helping businesses now through this difficult position".He said many experts supported a fiscal stimulus - which meant "helping families and helping businesses now through this difficult position".
If you exclude borrowing as your policy option then all you are left with, as the Conservatives seem to be doing, is sitting on their hands, watching the recession grow Lord MandelsonBusiness secretary
"As long as we have a medium term framework for fiscal sustainability then this is the right thing to do," he said."As long as we have a medium term framework for fiscal sustainability then this is the right thing to do," he said.
Earlier Lord Mandelson said the government would not put up taxes or cut spending as that would "make things even worse" - so to deliver a "fiscal stimulus", borrowing would have to increase. Interest rates
"If you exclude borrowing, further borrowing as your policy option then all you are left with, as the Conservatives seem to be doing, is sitting on their hands, watching the recession grow and doing nothing about it." He said any fiscal stimulus would be "temporary and affordable" and said he believed Britain was "better placed" than it had been in the 1990s to deal with a recession as interest rates were low and employment levels high.
'Short and painless' Earlier Lord Mandelson said putting up taxes or cutting spending would "make things even worse" - so to deliver a "fiscal stimulus", borrowing would have to increase.
He said taxes may be cut on the "immediate term" while a "medium term adjustment" would be "some years ahead". They are trying to govern by propaganda and just give you one side of the picture Alan DuncanConservatives
The alternative was to "watching the recession grow and doing nothing about it," he said.
He said taxes may be cut in the "immediate term" while a "medium term adjustment" would be "some years ahead".
Challenged that it would mean taxes going up after the next general election - when the Conservatives could be in power - he replied: "Rather than talk politics I think we need to focus on the economics here, concentrating on what the government needs to do now in order to make this recession as short and as painless as possible."Challenged that it would mean taxes going up after the next general election - when the Conservatives could be in power - he replied: "Rather than talk politics I think we need to focus on the economics here, concentrating on what the government needs to do now in order to make this recession as short and as painless as possible."
The banks have been given all this money, they're now going to be given a completely free rein and that's absolutely outrageous Vince CableLib Dems 'Absolutely outrageous'
He also said the government had to tackle "fear" among consumers as well as banks - some of which were "over-reacting" to the shock of the credit crunch in refusing to give small business loans. But shadow business secretary Alan Duncan said Lord Mandelson had confirmed what Mr Brown would not - that taxes would rise.
The Conservatives say they are being "fiscally responsible" and say it is a mistake for the government to think it can "borrow without limit". "They are trying to govern by propaganda and just give you one side of the picture whilst postponing the consequences of the other side of the picture. That is why I think that what they are doing is dangerous and deceitful."
On Sunday Mr Osborne accused the prime minister of wanting to "max out the nation's credit card" to pay for a "tax con" that the public eventually would have to pay back. He said it was a judgement call as to "whether you pour debt on debt now, for what could be an illusory stimulus which causes a lot of pain later, or whether you take a long-term fiscally responsible view as we are doing, which looks at the British economy over more than just the next few months".
He said the choice was one between "fiscal responsibility under the Conservatives, fiscal incontinence and imprudence under Labour".
The Liberal Democrats' Treasury spokesman Vince Cable says any tax cuts have to be "substantial" - in the region of £15bn-£20bn - if it was to get people spending and restore confidence.The Liberal Democrats' Treasury spokesman Vince Cable says any tax cuts have to be "substantial" - in the region of £15bn-£20bn - if it was to get people spending and restore confidence.
He also said that the government's recapitalisation of banks, which he supported, was running into some problems and businesses were finding it impossible to get credit as banks were "hoarding capital". He also said that the government's recapitalisation of banks, which he supported, was running into some problems.
He said: "Last week, Alistair Darling said that there would be no government directors of the semi-nationalised banks.He said: "Last week, Alistair Darling said that there would be no government directors of the semi-nationalised banks.
"The banks have been given all this money, they're now going to be given a completely free rein and that's absolutely outrageous, because the banking system is completely gummed up.""The banks have been given all this money, they're now going to be given a completely free rein and that's absolutely outrageous, because the banking system is completely gummed up."