Labour ups pressure over economy
Published 12/10/2011 | 00:22
George Osborne is facing fresh pressure for action to revive the UK economy amid renewed fears over prospects in the eurozone.
Plans for expanding a key bailout fund for the single currency area were thrown into disarray on Tuesday night by a rejection from the Slovakian parliament.
The enhanced European Financial Stability Fund - designed to shore up heavily indebted states such as Greece - cannot be implemented until it has been passed by all members. European leaders now hope Slovakia will approve the move later this week, even though the country's coalition government has collapsed.
With problems in Britain's biggest trading area showing no signs of abating and stock markets braced for another rough ride, Labour will up its attack on the Chancellor by forcing a Commons vote on domestic action to stimulate growth.
Ed Miliband's newly-reshuffled top team will use an Opposition Day debate to accuse the Government of "choking off" the recovery.
The showdown comes after a leading think-tank suggested the UK was making the slowest comeback from recession since the end of the First World War.
The National Institute of Economic and Social Research (NIESR) estimated that GDP grew at 0.5% in the three months to September, compared with 0.4% the previous quarter. However, it said the economy was still 4% below the pre-recession peak.
The freshly-installed shadow chief secretary to the Treasury, Rachel Reeves, said: "With families feeling the squeeze, no growth in our economy since last autumn and unemployment rising again, it's clear that Britain now faces a real jobs and growth crisis.
"Tax rises and spending cuts that go too far and too fast have crushed confidence and choked off the British recovery well before the eurozone crisis of recent months."
Labour will urge the coalition to use its "Plan B", which includes temporarily reversing the VAT rise, taxing bank bonuses to fund jobs for young people, and bringing forward state infrastructure projects.