Clegg admits ‘chilling’ cuts effect
By politics.co.uk staff
Nick Clegg is holding firm to the government’s austerity drive despite news earlier this week that Britain’s economy has started shrinking again.
The deputy prime minister said the coalition would “maintain our fiscal stance” after figures for the final quarter of 2010 saw GDP fall by 0.5%.
“The chilling psychological effect of the cuts would have been there under Labour’s plans anyway,” the Financial Times newspaper said.
“So you would have had these choppy growth figures while having a sovereign debt problem, too.”
David Cameron quoted OECD head Angel Gurria backing the coalition’s approach in prime minister’s questions yesterday, but the government faced criticism from financier George Soros.
“They may be right in embarking on it but I think they will probably have the sense that they will have to modify it when the effects are felt,” he said.
“I don’t think it can possibly be implemented without pushing the economy into a recession… the initial reaction has been very positive and we will have to see it unfold. My expectation is that it will prove to be unsustainable.”
Mr Clegg has asked party supporters to bear with the Liberal Democrats’ current unpopularity as the spending cuts dominate the news agenda.
He added: “I totally accept that the shrill level of controversy around the comprehensive spending review crowded everything out.”
Yesterday justice secretary Kenneth Clarke predicted the economy would take up to three years to recover.
“We mustn’t make people think that whoever was in government could say, ‘Nasty six months, but now it’s marvellous, this year’s going to be great, we are going to see great growth, we have solved all the problems’,” he said.
“I think we face a difficult two or three years before we are back to normality – and we have got to get people to understand that.”
