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Tories 'will prioritise debt cut' Osborne promises honesty on cuts
(1 day later)
Shadow chancellor George Osborne has promised that a Conservative government would work "flat out" to deal with the UK's budget deficit. Shadow chancellor George Osborne has said a Conservative government will always be "straight" with the public about its plans to cut spending.
In a speech in London, he said public debt was "likely to be the cause" of the next economic crisis, adding there was "no choice" but to deal with it. Mr Osborne told the BBC that unless the UK started to tackle its deficit, its economic policy would increasingly be "driven" by the financial markets.
The deficit, expected to be one of the key themes of the general election, is expected to rise to £178bn this year.The deficit, expected to be one of the key themes of the general election, is expected to rise to £178bn this year.
The government accused Mr Osborne of "talking down Britain". Labour and the Lib Dems say cuts could force the economy back into recession.
'Undermining stimulus' 'False choice'
Mr Osborne promised that measures to deal with debt would be based on the findings of an independent audit of the public finances, and forecasts for growth, which would be carried out soon after the election. In a major speech in London on Wednesday, Mr Osborne said the Conservatives would work "flat out" to deal with the deficit, saying there was "no choice" if the UK wanted to return to "meaningful growth"
An emergency budget would be held within 50 days, setting out the "overall fiscal path and spending totals" for the years ahead. In the Mais lecture, he said Labour did not have a "credible" plan to deal with the deficit and this risked "sapping" confidence in the economy.
George Osborne still can't or won't offer any plan to deal with the deficit of the economy Liam Byrne, Treasury minister He denied the Conservatives' spending plans were short on detail, saying he had pledged to reduce the public sector pensions bill and the cost of Whitehall bureaucracy, as well as increase the pension age.
That would include measures to reduce the public sector pensions bill and the cost of Whitehall bureaucracy, as well as increasing the pension age, Mr Osborne said. "There will not be token cuts. There will be real cuts but there will not be swingeing cuts," he told the Today programme.
Giving the annual Mais Lecture at the Cass Business School in London, the shadow chancellor said: "There is no choice between going for growth today and dealing with our debts tomorrow. Whoever wins the election would have to cut spending and those saying otherwise were presenting a "false choice" to voters, he said.
"Indeed we will not have any meaningful growth unless we show we can deal with our debts. FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme
"For it is the lack of a credible plan to deal with the deficit that is already pushing up market interest rates, undermining the monetary stimulus that is supporting the economy, and sapping the confidence of investors and consumers." "Whatever people will say about our economic policy, let me say we will tell people straight the problems the country faces and the principles and approach we will take to putting it right."
He restated the Conservatives' aim to eliminate the bulk of the structural deficit within a Parliament. Mr Osborne acknowledged that economists took different views about when to start cutting spending and how quickly.
'Out of his depth' But he said he agreed with recent comments by shadow business secretary Ken Clarke that the next government would have to be "tougher" on spending than Margaret Thatcher was in the early 1980s.
Labour has promised to halve annual borrowing within four years. "Whoever wins the election, Labour or Conservative, is going to have to cut spending. That is not something that Margaret Thatcher actually did. So tougher than Margaret Thatcher.
Chief Secretary to the Treasury Liam Byrne said: "Tonight, George Osborne had the chance to come clean about his spending plans - and he bottled it. "But that is true of a re-elected Labour government as well as a new Conservative government."
"The only thing he made clear in the Mais Lecture was that he's still ready to put economic recovery at risk. The Tories have said they would hold an emergency budget within 50 days of being elected and carry out on an independent audit of the public finances before then.
"He wants to start cutting support to economy now at the expense of jobs and public services." Mr Osborne said he would not "shy away" from tough decisions on spending but would do it a "careful and co-ordinated" way.
He added: "George Osborne still can't or won't offer any plan to deal with the deficit of the economy." 'Dogma'
Vince Cable: "The approach to public spending really has to be governed by the state of the economy" If the next government did not act quickly after the election, he said the UK - like Greece - risked losing the confidence of the financial markets and its own ability to control events.
Lib Dem Treasury spokesman Vince Cable said: "Osborne's latest economic commentary shows just how out his depth he is when it comes to the important economic issues. "A new government has to send the signal that Britain is open for business and we will deal with our economic problems in our own terms. We will not be pushed there by the markets."
"Slashing spending now could push the economy back into recession and inflict further structural damage on the UK that will make it harder to sustain our credit rating." The government, which has promised to halve annual borrowing within four years, has accused the Conservatives of hiding their true intentions about spending cuts.
He added: "In the current climate it is essential that decisions about the speed and timing of tackling the deficit are based on the state of the economy, not political dogma." Chief Secretary to the Treasury Liam Byrne said Mr Osborne wanted to "start cutting support to economy now at the expense of jobs and public services."
The Lib Dems have said the Conservatives' call for spending cuts this year is driven by "political dogma" not economic need.
"Slashing spending now could push the economy back into recession and inflict further structural damage on the UK that will make it harder to sustain our credit rating," its Treasury spokesman Vince Cable said.