Angela Eagle MP, Labour’s Shadow Chief Secretary to the Treasury, in response to former President Clinton’s comments on the UK’s austerity programme, said:
“Former President Clinton is right to make these warnings and David Cameron and George Osborne would be wise to listen to him. He joins the deputy secretary general of the OECD, three recent winners of the Nobel Prize for Economics and the Government’s own former chief economist in warning of the risks of George Osborne’s plan.
“By cutting too far and too fast and putting up VAT this year the Conservative-led Government has choked off Britain’s recovery and this slower growth is making it harder to get the deficit down. George Osborne is now set to borrow £46 billion more because of the weaker growth, higher unemployment and higher inflation his policies have delivered.
“After the global recession every major country needs to take difficult decisions on tax and spending cuts to get their deficits down. But we need a balanced deficit plan that puts jobs and growth first. Britain has faced the same global headwinds as other countries around the world, but our economy has flatlined over the last six months while America and almost all other EU countries have grown more strongly.
“Getting the economy moving and getting people off the dole and into work is the best way to get the deficit down. That’s why Labour has said the government should temporarily reverse its VAT rise to give the economy the jump start it urgently needs and repeat the bank bonus tax to build thousands of new homes, get young people into work and support small businesses.”
Speaking at the annual Campus Progress conference in Washington DC, former President Clinton said:
“In the current Budget debate there is all this discussion about how much will come from spending cuts, how much will come from tax increases. Almost nobody’s talking about one of the central points that everyone who’s analysed this situation makes – including the bipartisan Simpson-Bowles Commission – which said you shouldn’t do any of this until the economy is clearly recovering. Because if you do things that dampen economic growth. And the UK’s finding this out now. They adopted this big austerity budget. And there’s a good chance that economic activity will go down so much that tax revenues will be reduced even more than spending is cut and their deficit will increase.”