Tax cuts or more money not options, insists PM
Published 26/07/2011 | 08:00
Prime Minister David Cameron poured cold water on hopes that tax cuts or a fresh round of money-printing may be deployed to stimulate the economy, on the eve of what are expected to be weak growth figures.
Pressure on the Government to announce a "plan B" for the economy will increase if today's GDP figures show the UK undershooting earlier predictions of 0.5% growth over the three months to June.
Most City economists have trimmed their own forecasts back to 0.1% or 0.2%, with some even predicting negative growth.
Business Secretary Vince Cable suggested that the Bank of England could stimulate a sluggish economy with a further injection of money through so-called "quantitative easing", while Chancellor George Osborne has hinted that he would like to cut taxes on business.
But Mr Cameron insisted that there was no leeway for either fiscal stimulus through tax cuts or public spending increases, or monetary stimulus in the form of the Bank reducing interest rates or printing money.
Asked whether tax cuts or quantitative easing were options, the Prime Minister replied: "There's no country, really, that can afford another fiscal stimulus. They've all run out of money.
"There isn't some great monetary stimulus you can give when interest rates are as low as they are.
"The right step for an economy like ours is to get on top of your debt and your deficit and then make it a better place for businesses to grow and expand and employ people."
Labour have been calling for an economic 'plan B'.
The party has insisted that the Government's policy of using tax rises and spending cuts to eliminate the national deficit by the end of the Parliament risks choking off growth by cutting "too far and too fast".