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Clegg says Coalition was wrong to cut capital spending | Clegg says Coalition was wrong to cut capital spending |
(about 1 hour later) | |
The coalition made a mistake in cutting back capital spending when it came into office, Nick Clegg has said. | The coalition made a mistake in cutting back capital spending when it came into office, Nick Clegg has said. |
The deputy PM told The House magazine that ministers had reassured themselves at the time that the reduction was in line with plans drawn up by Labour. | The deputy PM told The House magazine that ministers had reassured themselves at the time that the reduction was in line with plans drawn up by Labour. |
But they now realised investment in infrastructure was crucial for economic recovery, he added. | But they now realised investment in infrastructure was crucial for economic recovery, he added. |
His comments came ahead of fresh GDP figures - which may show the UK economy is contracting once again. | |
If the figures show the economy shrank in the final three months of 2012 they will be held to show that Britain risks suffering a "triple-dip" recession. | If the figures show the economy shrank in the final three months of 2012 they will be held to show that Britain risks suffering a "triple-dip" recession. |
Labour said Mr Clegg's comments were the coalition's first admission of a "serious mistake" on the economy. | Labour said Mr Clegg's comments were the coalition's first admission of a "serious mistake" on the economy. |
'Foster recovery' | 'Foster recovery' |
In an interview with the magazine, Mr Clegg said: "If I'm going to be sort of self-critical, there was this reduction in capital spending when we came into the coalition government. | In an interview with the magazine, Mr Clegg said: "If I'm going to be sort of self-critical, there was this reduction in capital spending when we came into the coalition government. |
"I think we comforted ourselves at the time that it was actually no more than what [former Chancellor] Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop off in capital investment. | "I think we comforted ourselves at the time that it was actually no more than what [former Chancellor] Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop off in capital investment. |
"But I think we've all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible." | "But I think we've all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible." |
He said more capital investment would create jobs and help the economy in the long run. | He said more capital investment would create jobs and help the economy in the long run. |
In his Autumn Statement, Chancellor George Osborne announced an additional £5bn of investment spending, including £1bn for road upgrades and £1bn for schools expansion. | In his Autumn Statement, Chancellor George Osborne announced an additional £5bn of investment spending, including £1bn for road upgrades and £1bn for schools expansion. |
Conservative health minister Anna Soubry told BBC One's Question Time there was "some merit" in the deputy prime minister's comments. | |
She said: "At the beginning we weren't making - and this was very early on in the coalition - big capital expenditure. | She said: "At the beginning we weren't making - and this was very early on in the coalition - big capital expenditure. |
"But then if you look at what's been rolled out, certainly if I look at my own region... there has been phenomenal investment by this government in the infrastructure, and rightly so." | "But then if you look at what's been rolled out, certainly if I look at my own region... there has been phenomenal investment by this government in the infrastructure, and rightly so." |
Asked about the prospect of a triple-dip recession, Mr Clegg said the "overwhelming" economic evidence showed more capital spending would help. | Asked about the prospect of a triple-dip recession, Mr Clegg said the "overwhelming" economic evidence showed more capital spending would help. |
And he said more would need to be done to "put money back in the pockets of people on middle and low income". | And he said more would need to be done to "put money back in the pockets of people on middle and low income". |
'Junk austerity' | |
If the economy falls into recession again - that is, suffers two consecutive quarters of negative growth - commentators will regard it as a "triple-dip" recession. | |
The UK registered a double-dip recession last year, contracting for three quarters in a row before bouncing back with growth of 0.9% in the three months to September. | The UK registered a double-dip recession last year, contracting for three quarters in a row before bouncing back with growth of 0.9% in the three months to September. |
Mr Osborne has said UK spending cuts must continue if the government is to retain credibility. | Mr Osborne has said UK spending cuts must continue if the government is to retain credibility. |
His comments came as a rebuff to the International Monetary Fund's chief economist, Olivier Blanchard, who called for the UK to slow down its austerity programme. | His comments came as a rebuff to the International Monetary Fund's chief economist, Olivier Blanchard, who called for the UK to slow down its austerity programme. |
"We have a credible and flexible debt reduction plan. That credibility is very hard won and easily lost," said Mr Osborne. | "We have a credible and flexible debt reduction plan. That credibility is very hard won and easily lost," said Mr Osborne. |
Labour's Rachel Reeves said of Mr Clegg's comments: "This is the first admission that this government has made serious mistakes on the economy. | Labour's Rachel Reeves said of Mr Clegg's comments: "This is the first admission that this government has made serious mistakes on the economy. |
"But the real question is what Nick Clegg's government is going to do about it. We have urged ministers to bring forward infrastructure investment and build thousands more homes, but they have refused to listen." | |
Meanwhile, the Daily Telegraph href="http://www.telegraph.co.uk/finance/financialcrisis/9825414/Davos-2013-Junk-rhetoric-of-austerity-says-Boris-Johnson.html" >reports that London Mayor Boris Johnson is urging the coalition to "junk the rhetoric of austerity and be confident". | |
Mr Johnson is set to outline a seven-point economic plan to business leaders at the World Economic Forum in Davos later, which will include more house-building, investment in roads and railways, and tax cuts, according to the newspaper. | |
He also reportedly wants people to "stop bashing industries in which we are strong like banks". |