Darling: UK to cut spending
LONDON (Reuters) - Britain will need to cut spending when the economy fully recovers, finance minister Alistair Darling said yesterday without spelling out where the axe would fall.
Instead, Darling said there was still a role for targeted investment and said the "front line" would get priority. Treasury officials said more detail would be forthcoming in the pre-budget report, which is usually made in November.
Opposition leader David Cameron, tipped to win a national election due by next June, said it was urgent to get on with reducing spending now to tackle a "debt crisis". With the budget deficit expected to top 12 percent of gross domestic product and an election looming, public spending has become a political battleground and financial markets are keen for details on how either main party will cut it.
Pointing to the conclusions of the meeting of G20 finance ministers and central bankers in London last weekend, Darling said economic support would have to continue for now to dig the world out of its worst downturn since World War Two.
"To cut spending now would kill off the recovery. But when the recovery has been established, all countries must rebuild their fiscal strength," he said in a speech in Cardiff, Wales.
"Spending will have to be tighter everywhere — all the more reason for ensuring that the front line comes first."
Darling offered little fresh information on where cuts would come. Rather he tried to draw a distinction between his Labour Party and the opposition Conservatives by claiming they would cut expenditure ignoring the social cost.
Labour, on the other hand, believed in the "enabling hand of government" and would thus keep spending on areas where it believed it could make a difference, Darling said.
But it would also draw back in some areas as there were limits to what government could do, he added, marking perhaps the most explicit admission by a senior Labour figure that some budgets would have to be cut.
Prime Minister Gordon Brown's strategy previously for much of this year had been to contrast continued spending, or investment, under Labour versus Conservative cuts. Conservative leader Cameron said Brown was still not being straight with people. "He's still sticking to the same old myth that we can spend, spend, spend," he said in a speech in London.
"You need to start the process of bringing spending down now. In practice, that means that the substantial increase in spending next year, which is currently planned by Labour, is unaffordable."
Cameron promised that under a Conservative government, ministers' pay would be cut and members of parliament would no longer have their meals subsidised. But the Conservatives too have given scant detail on how they would balance the books if and when they are in power, beyond promises to ringfence certain priority areas.
A poll showed earlier yesterday the Conservatives are set to end Labour's 12 years in power, although more than half of voters say they may still switch allegiances.