CAMERON WARNS OF EMERGENCY BUDGET
AN incoming Conservative government plans to hold an “emergency budget” to tackle the country’s record budget deficit within 50 days if it wins the next general election.
Tory leader David Cameron said yesterday that the emergency budget would be about “about getting the deficit under control”.
“But it should also be a budget that goes for growth, that gets this economy moving again,” Cameron told the BBC’s Andrew Marr show yesterday.
Measures in the budget would include plans to cut the rate of corporation tax from 28p to 25p and national insurance breaks for business start-ups.
Small firms will see their tax rate cut to just 20p. Allowances would be eliminated to pay for the headline reductions. Further details are expected in Cameron’s speech to the CBI today. He said it would be not so much a “big bang as a big plan”.
Failure to cut the deficit could lead to interest rates rising and the economy sliding back into recession, he added. He also repeated the conservative party’s intention to freeze public sector pay, trim benefits and seek efficiencies to help reduce the deficit.
Chancellor Alistair Darling slammed the proposals. He said Cameron has “called for cuts now, at the worst possible time, since they would choke off the recovery”.
Treasury officials have played down figures from City economists that have suggested this year’s deficit will be as high as £200bn or £220bn.
Numbers are still being finalised, they said, and more details would be given at the time of the pre-budget report on 9 December.
But some economists were this weekend comparing the UK to Japan, and say the economy could suffer a decade of stagnation.
Labour set out its plan to halve the deficit over four years in the Queen’s Speech last Wednesday.
Today Gordon Brown will argue that his current policy of supporting the economy with a fiscal stimulus needs to continue until “the private sector recovery is established and we will ensure that nothing we do will jeopardise that recovery.”
Brown, who is under pressure from the CBI to make faster cuts to the budget deficit than his government is planning, is showing no signs of turning off the taps.
He has been boosted by an Ipsos Mori survey which puts the Conservatives on 37 points, only six ahead of the Labour government on 31 with the Liberal Democrats on 17, the smallest gap between the two main parties since last December.