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| Brown defends higher borrowing | |
| (30 minutes later) | |
| Gordon Brown has defended his plans to increase government borrowing in order to tackle the economic downturn. | Gordon Brown has defended his plans to increase government borrowing in order to tackle the economic downturn. |
| The prime minister told business leaders it was "responsible" for government to boost spending at this time to "support economic activity". | The prime minister told business leaders it was "responsible" for government to boost spending at this time to "support economic activity". |
| Opposition parties have attacked the current levels of debt, saying Britain is inadequately prepared for recession. | Opposition parties have attacked the current levels of debt, saying Britain is inadequately prepared for recession. |
| Leading economists have also criticised the government over its spending plans and called for tax cuts instead. | Leading economists have also criticised the government over its spending plans and called for tax cuts instead. |
| 'Misguided' strategy | 'Misguided' strategy |
| In a letter to a Sunday newspaper, a number of economists warned against an expansion of government spending as a way of stimulating the economy. | In a letter to a Sunday newspaper, a number of economists warned against an expansion of government spending as a way of stimulating the economy. |
| They described a focus on public works projects and higher spending as "misguided and discredited". | They described a focus on public works projects and higher spending as "misguided and discredited". |
| The latest quarterly public debt figures hit a record £37.6 billion - higher than the whole of the previous year. | The latest quarterly public debt figures hit a record £37.6 billion - higher than the whole of the previous year. |
| The responsible course is to borrow now to maintain growth and output Gordon Brown Keynesian theory explained | The responsible course is to borrow now to maintain growth and output Gordon Brown Keynesian theory explained |
| In a speech in London, Mr Brown said fiscal policy would be used to kick-start the economy so as to "help people through difficult times". | |
| However, in a change to his planned text, Mr Brown declined to say explicitly that borrowing would rise, stating instead that it was "right and responsible" to increase "investment" at the current time. | |
| But he said that when the economy begins to recover and tax revenues increase, "borrowing" levels as a share of economic output would then come down. | |
| Mr Brown defended government measures to support the faltering economy including help for small businesses and homeowners to stave off the threat of repossessions. | Mr Brown defended government measures to support the faltering economy including help for small businesses and homeowners to stave off the threat of repossessions. |
| "I can see why people are insecure and worried about their future," he said. | "I can see why people are insecure and worried about their future," he said. |
| Outlining what he said was a "comprehensive" set of policies to help the UK through its current economic problems, he said the economy had the government's "undivided attention". | |
| "We have to look at all the areas where we can move the economy forward and restore confidence in the banking and financial system." | |
| He said he would do "whatever is necessary" to ensure that banks swiftly moved to increase lending to businesses and homebuyers. | |
| Welfare reform | Welfare reform |
| The speech came on the day incapacity benefit was being replaced by a new allowance aimed at getting one million people off benefits. | |
| Mr Brown said welfare reform would be intensified despite the economic climate, saying that it would help people into new jobs. | Mr Brown said welfare reform would be intensified despite the economic climate, saying that it would help people into new jobs. |
| "The very moment in an economic downturn when we need to invest in human capital is no time to slow down welfare reform," he said. | "The very moment in an economic downturn when we need to invest in human capital is no time to slow down welfare reform," he said. |
| Over the weekend, Mr Brown paid a brief visit to Glenrothes in Scotland as part of a by-election campaign and made predictions food and fuel bills would begin to come down next year. | Over the weekend, Mr Brown paid a brief visit to Glenrothes in Scotland as part of a by-election campaign and made predictions food and fuel bills would begin to come down next year. |
| He also hinted falling oil prices could lead to further co-ordinated interest rate cuts. | He also hinted falling oil prices could lead to further co-ordinated interest rate cuts. |
| "Now inflation is actually coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, round the world to make a decision about interest rates," he told the BBC. | "Now inflation is actually coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, round the world to make a decision about interest rates," he told the BBC. |
| Amid growing calls for a further cut in borrowing, Mr Brown said on Monday that it was not "up to him" to tell the Bank of England what to do regarding interest rates. | |
| But he added that action on monetary policy did have a "role to play" in helping support the economy. | But he added that action on monetary policy did have a "role to play" in helping support the economy. |
| Employment minister Tony McNulty said later that any programme of public spending to boost the economy would be "focused" rather than "reckless". |