Darling denies ‘counter-intuitive’ borrowing
Alistair Darling admitted Britain’s heavy borrowing “may feel counter-intuitive” but launched a strong defence of the government’s strategy in a key speech this lunchtime.
The chancellor, speaking at a roundtable event in London’s Docklands, said that economic recovery was still some way off and that “we are not yet out of the woods”.
He urged the City to support the government’s enormous public debt despite the “uncertainty” currently plaguing recessionary Britain.
“Borrowing to support people now and to invest in the future may feel counter-intuitive. That’s why Keynes called it ‘the paradox of thrift’,” Mr Darling said.
“But in the longer run, it will mean the bills we face as a country are lower, and that we are better placed to pay them off.”
His speech was threaded with veiled attacks on Conservative policies, outlining a defence of the government’s interventionist impulses across a number of policy areas.
“Unemployment continues to rise. But some still call for an immediate end to support for businesses and families. Ending support now would be wrong and dangerous,” he added.
And on the global economy, where the situation “remains fragile”, he said “it’s too early to sit back and relax” ahead of the coming G20 finance ministers’ meeting in St Andrews, Scotland.
“We need to continue to support our economies – helping those struggling to deal with the impact of the downturn, until they are able to stand on their own again,” Mr Darling pressed.
“To make the wrong choices, to refuse to invest, will simply mean that the economy gets smaller, we all get poorer, and even greater and deeper cuts are needed.
“We have seen this before – the savage cuts of the 1980s meant whole swathes of our economy disappeared.”
