British chancellor George Osborne today ruled out unfunded tax cuts or major increases in public spending.
Speaking to the Conservative Party conference in Manchester, Mr Osborne rejected calls to loosen his deficit reduction policy, warning that even a few billion pounds worth of additional spending would put at risk Britain’s credibility on the international markets and force up interest rates.
The warning came as the Chancellor announced an £800 million one-year council tax freeze, a £200 million boost for science and £150 million for mobile phone masts as a stimulus to growth, funded out of “eliminating waste and inefficiency” across Whitehall departments.
Mr Osborne said he had heard calls from Labour and some Tory backbenchers to deliver tax cuts and extra spending to kick-start Britain’s stalled growth, and considered all of them carefully. But he said it was “an illusion” to think that the injection of funds into the economy would revive growth.
“Borrowing too much is the cause of Britain’s problems, not the solution,” he told the conference. “We would be risking our nation’s credit rating for a few billion pounds more, when that amount is dwarfed by the scale and power of the daily flows of money in the international bond markets, swirling around ready to pick off the next country.
“Conference, we will not take that risk. We are in a debt crisis, it is not look a normal recovery. You can’t borrow your way out of debt,” he said.
“I’m a believer in tax cuts - permanent tax cuts paid for by sound public finances,” he said. “Right now, temporary tax cuts or more spending are two sides of exactly the same coin, a coin that has to be borrowed - more debt that has to be paid off.”
Mr Osborne said Britain’s current economic troubles were caused by the “catastrophic mistakes” of the previous Labour administration, as well as banks which “let down their customers, let down their shareholders and let down this country”.
He said the delegates who booed the name of Tony Blair at last week’s Labour conference in Liverpool had effectively been booing the families and businesses who turned to New Labour under his leadership, and said the Conservatives now provided a home for their votes.
PA