Government edges towards Plan B
By Ian Dunt Follow @IanDunt
There were continued signs of a change in the government's economic policy today, as reports emerged of plans to inject £5 billion into the economy.
The development follows an IMF report into the world economy which lowered its growth forecast for the UK for the third time in nine months.
In a generally depressing appraisal of the world economy, the organisation warned George Osborne that a slower pace of deficit reduction might be necessary if the UK continues to behave so sluggishly.
The BBC reported this morning that unnamed Cabinet ministers were calling for the £5 billion to be spent on infrastructure projects such as road building and high-speed broadband.
Because the Treasury's fiscal targets are based around current spending rather than capital expenditure the move would not constitute a U-turn on existing policy.
It would also compliment the extra £10.6 billion of public spending the chancellor already put in the March 2011 budget.
Neither energy secretary Chris Huhne or chief secretary to the Treasury Danny Alexander would confirm the reports.
"I just don't recognise, I'm afraid, the numbers involved or the process as it's described," Mr Alexander told the Today programme.
Mr Huhne said: "I don't recognise that figure at all and I have absolutely no knowledge of that."
The energy secretary admitted ministers needed to be "creative and imaginative about bringing forward more spending", however.
Nick Clegg and Vince Cable have both given speeches this month promising to speed up existing infrastructure projects to boost demand.
While the changes are incremental, the reports signal an acceptance of opposition arguments about a lack of growth under austerity economics and play strongly into the hands of shadow chancellor Ed Balls.
As the news emerged, new figures from Nationwide Building Society showed UK consumer confidence had fallen to a four-month low.
Official figures also showed the UK borrowed £15.9 billion last month – a record for August.
