The Conservative party's economy policy would "strangle the recovery at birth." Their cuts are equivalent to taking £5 billion out of the economy or 1/3% GDP.
The Conservative party’s economy policy would “strangle the recovery at birth” with cuts equivalent to taking £5 billion out of the economy, according to the Labour party.
At a press conference this morning, Peter Mandelson, Yvette Cooper and Liam Byrne outlined how David Cameron’s plans to “start” cutting spending in 2010 would effectively remove £11.2 billion from the economy. Liam Byrne said that Treasury models showed that the cut would be equivalent to cutting GDP by £5 billion or one third of a per cent.
The Labour party outlined in the pre-Budget report that it would increase public spending in 2010-11 by £31 billion. The Conservative party has indicated that they would start spending cuts on day one. Last month, George Osborne said:
“Total spending is planned to go up by £31 billion in nominal terms, or by more than 2 per cent in real terms. During a period when the Treasury expects the economy to be growing by at least 2 per cent, and with the largest budget deficit of any developed economy, that is simply not credible.”
The Labour party’s document ‘Conservative party risk to recovery‘ outlines that:
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“If the Conservatives were to allow the increase in Annually Managed Expenditure [including debt interest and unemployment benefits] to go ahead, as David Cameron indicates, they would only be left with the option of reducing Resource Departmental Exependiture Limits. It is this area that David Cameron said should see “some reductions” next year…
“If the Conservatives restricted their cuts to just this additional planned spending, they would take £11.2bn out of the economy.
“If they actually wanted to cut departmental spending, as they often claim, they would need to go beyond £11.2bn.”