Morning:
9°c
Darling defends £1 trillion gamble
26 Nov 2008- Qatada freed with tough bail curbs
- Britain gets credit rating warning
- True jobless total '6.3 million'
- PM to vow action on whiplash claims
- Corrupt officer Dizaei jailed again
- Rangers to go into administration
- 'Arena funeral' for tragic Whitney
- Crackdown on 'lone' parents benefit
- Public ban 'reduces home smoking'
- Actor Penn urges Falklands talks
Chancellor Alistair Darling defended his £1 trillion gamble to drag Britain out of recession, insisting that he was doing the "right thing" to support the economy.
Mr Darling said it would have been wrong to walk away and leave people to "sink or swim" as he faced questioning over Monday's pre-budget report designed to kick-start the struggling economy with a £20 billion boost.
"It seems only the Conservatives who are saying, as they did in the 1980s and the 1990s, 'just walk away from people, leave them high and dry, let them sink or swim'," he told GMTV.
"I just do not think that is right thing to do. People expect the Government to help them. We will be helping people and I fully intend to see that through," he said on GMTV.
In a pre-budget report that surprised many with its scope, Mr Darling announced plans to cut VAT, boost tax allowances, and offer more cash to parents and pensioners.
But the "fiscal stimulus" will come with a sizeable price tag. Mr Darling admitted that state borrowing would hit £78 billion this year and £118 billion next year, while total national debt will top £1 trillion by 2012-13.
Shadow Chancellor George Osborne said that the best way to stimulate the economy was through "radical" cuts in interest rates.
"We have got to get lending going in this economy again, you have got to get credit to small businesses, that is where the action is needed, not, frankly, taking a huge risk with the public finances," he told the BBC Radio 4 Today programme.
The Governor of the Bank of England backed the Government's £20 billion gamble to drag the UK out of recession. Mervyn King said the measures outlined in the Pre-Budget Report seemed "perfectly reasonable" given the "extraordinary circumstances".
But, giving evidence to the Treasury Select Committee, Mr King also warned there was a "long hard road ahead" to restore stability to the economy. Mr King said Chancellor Alastair Darling's cut in VAT meant it was now "very likely" that the UK would suffer negative inflation next year - but predicted the country would avoid a negative spiral of deflation.
Reader views (6)
It's insane, one politician after another, as each day goes past offering more Tax payers money (Government has no real money of its own, only what it can raise in tax). One day its Darling the next Mr. Paulson in the U.S. Most people wouldnt know how to write 1 trillion on paper. I wonder which Politician will be offer billions to plug the dyke tomorrow. Get me outta here.....
- Colin Bond, London, 25/11/2008 14:29
Report abuse
I would just like to thank Messrs Brown and Darling for the 2.5% increase in profit that he has given most small retail businesses ! Unintentional I am sure, but who is going to spend more money adjusting tills, menus, advertising etc rather than take an extra 2.5% profit !
Well done! Another own goal?
- Tim Taylor, London, UK, 25/11/2008 12:44
Report abuse
The government were warned three years ago that public borrowing to finance spending was out of control and chose to ignore it. They are now saying that although the country cannot afford it they will continue to borrow and spend!
I for one would turn down messers Brown and Darling for any loans and would be looking to repossess No. 10 and 11 Downing Street.
- Nigel Solkhon, Brentwood, Essex, 25/11/2008 12:02
Report abuse
If anyone had a wife or husband who got themselves into massive debt, and then took out more credit cards, in the hope of straightening things out, it would be fair grounds for divorce, on the grounds of insanity.
I demand a divorce from Darling, Brown and New Labour, now!
- Peter Thurgood, London, UK, 25/11/2008 10:48
Report abuse
Unbelievable. Does any sane person believe borrowing on credit cards is a good idea? This is extra the same process: spend like mad what you don't have ... then spend years paying it back at way above the odds. Does Mr Darling even have an 'O' Level in Maths ???
- Marianne, SW France, 25/11/2008 09:41
Report abuse
VAT reduction is very odd. No one is going to spend more because they will save 2.13% (thats the amount that will get passed on after businesses spend loads reconfiguring tills etc) - i mean if i was not willing to spend £117.50 then am I really going to say ok its £114.50, I will take 2. Very expensive and very stupid - better to reduce NI for business to make redundancies less likely - its madness and all we get is another tax headache from Labour which its taken 20 years to get over from the last time.
- Christian Ball, London, UK, 25/11/2008 09:17
Report abuse
