UK official: Nation must spend to grow
Updated: 2011-09-22 07:57
By Robert Hutton and Thomas Penny (China Daily)
Government to unblock 40 infrastructure projects, says deputy PM
BIRMINGHAM, United Kingdom - UK Energy Secretary Chris Huhne said the government should speed up capital spending to help the economy, after the International Monetary Fund (IMF) said ministers may need to consider delaying some of their fiscal squeeze.
"We've got to be creative and imaginative about bringing forward more spending," Huhne said on Tuesday night at an annual conference in Birmingham, central England.
He said the option of "pump-priming" the economy by increasing expenditure is "blocked off to us" because of "the scale of our budget deficit".
Deputy Prime Minister Nick Clegg said on Sept 14 that the government was going to "unblock" 40 infrastructure projects in an effort to spur growth. He said the government wanted to "put its foot on the accelerator".
BBC Television reported on Tuesday evening that ministers were discussing increasing spending on projects such as roads, rail and broadband communication by as much as 5 billion pounds ($8 billion), without saying where it got its information.
The Treasury denied the report."I don't recognize the numbers involved or the process as described," Danny Alexander, the chief secretary to the Treasury, said in an interview with the BBC on Wednesday. "We're not changing our spending plans."
'Stick to our plans'
Alexander said the message he had taken from the IMF report "is we should stick to our plans".
UK gross domestic product will rise 1.1 percent this year and 1.6 percent next year, the Washington-based fund said in its World Economic Outlook, cutting previous projections of 1.5 percent this year and 2.3 percent next year.
"What we need to have across the world is countries taking action that's appropriate to their own circumstances to deal with the problems that they face," Alexander said. "We have a great asset; we have clear spending plans and we're sticking to them."
Business Secretary Vince Cable has already urged the Bank of England to expand its program of bond purchases to help boost growth.
"There are ways in which you can stimulate an economy without disrupting your fiscal discipline," he said. "We don't think it's time to change tack at the moment."
"We have two strands to policy, one is deficit reduction and we must stick to that for policy credibility. The other is a growth strategy and we should stick with that too. There's already flexibility built into the plans," he said.
The fiscal target the government is working to "is the structural current balance", Huhne said. "It is current, not capital, spending. That is an important distinction."
(China Daily 09/22/2011 page17)
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