Alistair Darling is busy preparing next week's budget
Alistair Darling, who admits that next week’s Budget will be “critical” in determining the result of the general election, is coming under increasing pressure from left-wing MPs, trade union leaders and leading economists to provide a fiscal stimulus for the economy rather than following the Conservative line of savage cuts in public spending.
The Chancellor has said: “It is important because the economy and the decisions we take [on March 24] that will affect the next five, 10, 20 years are pretty critical to the big decision – the big choice the country will make whenever the election is called.”
With the economic recovery still fragile, more than 30 MPs – including Jon Cruddas, Austin Mitchell and Michael Meacher – have joined trade union leaders Tony Woodley, Dave Prentis, Paul Kenny, Billy Hayes and Keith Norman, academics and activists in pressing the Chancellor to boost economic growth by announcing a second fiscal stimulus.
Colin Burgon, Labour MP for Elmet, said: “The Tories are planning cuts on an even greater scale than Thatcher ever achieved – which would send the economy back into recession and cause suffering to millions of people. With business investment still plummeting, the exact opposite of these Tory cuts is required.
“Government investment to modernise the economy, in the green jobs of the future and in education, would not only boost the economy in the short term but would also improve long-term growth and prosperity. Going for growth is the best way to reduce the deficit.”
Conservative calls for “immediate cuts” have been met not just with anger from public sector workers – who do not see why they should suffer for the mistakes made by the bankers and brokers who already seem to be back on big bonuses – but by a growing chorus of criticism from economists who say that cuts will only drive the economy back into a “double dip” recession.
Mr Burgon said: “The Government was right to stimulate the economy with a variety of measures last year and so offset some of the worst effects of the recession. Yet, as some of the world’s leading economists have pointed out, the fragile nature of the recovery means that fiscal stimulus is still required. However, according to the IMF, Britain is one of only two G20 countries not currently planning any such fiscal stimulus in 2010.”
Those pressing for a stimulus argue that a programme of Government investment would not only stimulate the economy in the short term, but would increase long term growth, thereby lowering debt levels through a higher tax take.
Mr Burgon said: “We encourage the Chancellor to use the forthcoming budget to announce a second fiscal stimulus – especially in housing and transport, where investment has fallen most, and with a focus on developing a low carbon economy – which would both help to secure economic recovery and create much needed jobs.”
