Morning:
14°c
Darling warns of bumpy road ahead for economy
Joe Murphy, Political Editor22.09.08
Alistair Darling today warned families that the economy is on a "bumpy road" that will see more pain before the recovery.
In his keynote speech to the Labour conference, the Chancellor insisted he was confident that recovery would come, thanks to the "talent and resilience of this country".
And Mr Darling also went out of his way to praise Gordon Brown's leadership during the turmoil, telling the conference hall in front of a pleased-looking Premier: "The true test of mettle comes when life is tough, not easy. These are very uncertain times. But one thing I am certain about is that we have the right Prime Minister, the right team, and the right policies to help our country through them."
But the Chancellor said the bad times were far from over, despite an injection of £100 billion into the banking system by the Bank of England.
"All this will take time to work its way through," he warned. "We are on a difficult road and there will, I'm afraid, be bumps along the way."
Mr Darling was given a warm standing ovation for his speech, which was delivered in his trademark low-key style to a packed hall in Manchester. His reception, despite some criticisms from Left-wing speakers, strengthened his position in a looming Cabinet reshuffle.
Earlier Mr Darling signalled that he will let borrowing rip by billions of pounds to keep the economy afloat - but left an ominous question mark over the possibility of long-term tax rises to pay it back.
He made clear there would be no big tax rises in this autumn's pre-Budget report because hitting firms and family budgets would risk damaging the economy further. Instead he indicated he would borrow freely to keep spending flowing. Experts were predicting that the Treasury would have to borrow some £90 billion this year. But the Chancellor served a warning that the money would have to be paid back. "The key thing to do is that when the economy slows down you support it," he said in a round of interviews. "But as I am going to make clear, in the medium term all governments have to live within their means."
Mr Darling's comments effectively ruled out the possible threat of big income tax rises in the spring. "This is not the time to be taking money out of the economy," he argued. "This is the time to support the economy. People are hard pressed at the moment, I can't really be clearer than that." The Chancellor was less clear about how the money would be repaid but did not rule out future tax rises. He said: "When times get better, you can reduce the amount of debt."
In his speech to conference, Mr Darling stressed the need to put stability first. He said he would not shrink from regulation wherever it is shown to be needed. "I can promise you that wherever weaknesses are found in the financial system, I will take steps to deal with it," he said.
Reader views (15)
Of course there's a bumpy road ahead. Brown and Co have been left in charge of maintaining the surface for the last 10 years.
- Peter Haldane, London
"A bumpy road ahead!" Oh Dear, methinks Alistair is stating the bleeding obvious. As for his 'claim' that its was.."All them Greedy Bankers fault!" Well, yes that is true, but - Who was Chancellor and set the economic policies, priorities and agendas? Who was the person who stated..."No more Boom or Bust!" Who was so complacent over many years to allow Credit to rip?
Why Pa McHasbean Broone of course. And you, Mr Darling, state that it has "Nothing to do with Labour!" Oh dear, the tales they do tell. Just like Pontius Pilate washing his hands and distancing himself from the crime? Oh Diddly Dearie Me, of course, it really is the fault of all them Nasty Torys!
- L Oncle Vanya, chelmsford England
What a load of utter rubbish this government is. Let's call an election now and throw the tools out of office.
- Rod, Epping UK
All governments must "live within their means" - sounds like we cannot spend what we don't earn. Come back Jim Hacker all is forgiven - Yes Prime Minister
- David Smith, London
If his wife really loved him and his constituency office weren't totally useless and his civil servants knew their jobs - they would do something about his ludicrous eyebrows. He looks like Bert off Sesame Street.
- C. Nichol, London
New Labour are halfway to "ending boom and bust". They have ended the boom.
- Neil, london uk, Airstrip ONE .
Alistair Darling is simply a genius, isn't he? We'd never have known that times are hard, would we? And he got a standing ovation? How encouraging, how heart warming, how happy we should be knowing that our fate is in such sure hands.......
- John Problem, Hackney Wick, London, UK
Same old Tax n' Spend Labour! But why should Darling & Co worry? Their expense accounts buffer them against the harsh economic realities that many people will have to face. Further, why are we wasting millions in aid to Africa and other corrupt places, when these resources are needed for British people? Just what planet is Labour on?
- Joannie, London, England
Here we go again. Borrow more and more to buy votes. Suck up to Scotland. They know they will be thrown out of office so they screw things up some more just so the Tories will have to clear up the mess and take the hits for it.
Just like in 1979 - except the mess is even worse.
- David, East Grinstead
What fantasy land is Darling living in? With a big increase in unemployment levels imminent and falling corporate tax revenues he expects to be able to keep taxes on hold until the economy comes out of recession?? Anyone with a half a brain knows this recession will be prolonged. The economy has been built on a house price boom and with house prices projected to fall by a third it is anyones guess how severe this could get. The Lib Dems seem to be the only ones not burying their heads in the sand. The govt needs to slash wasteful bureaucratic spending asap and seriously consider increasing taxes before govt debt spirals out of control which would cause a downward spiral of higher inflation/higher interest rates and further falling house prices and bankruptcies.
- Steve, London
All this mess we are in now is thanks to so called Prudent Gordon through his years as Chancellor, not curbing the property bubble,selling gold at rock bottom price and abolishing Pension tax credits.
Spend Spend Spend!! Debt, Debt, Debt!!
And let someone else clear up the Mess!!
- Ck, Middx, UK
Thanks Gordon - no more Boom and Bust, more like Boom and financial ruin! Where has our money gone?
- Joe, London
It's a nice thought, Amoreno, but you wouldn't be in the UK experiencing the agony of another 5 years of labour! I personally thinking Gordon, Alastair - and Tony (retrospectively) - should be locked up indefinitely at HM's pleasure when they're finally booted out, and certainly not given any peerages, I mean can you think of anyone who LEAST deserves them?
- Marianne, S W France
All this guff by all these clueless people. Now it's a global problem - then it was the British economic miracle. Except, it was all funded by debt - under Labour Chancellor Brown.
- Delphine, Oxford
if i were cameron i would not even contest the next election on principle.stand down and say labour have left such a mess they should be made to clean it up over 5 years.why inherit a booby trapped hospital pass?
- Amoreno, luxembourg
