Tory cuts would “strangle” growth by £5bn

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:

“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.”

8 Responses to “Tory cuts would “strangle” growth by £5bn”

  1. Ben Cooper

    RT @leftfootfwd: How Tory plans to "strangle" growth would cut GDP by at least £5 billion or 0.33% //bit.ly/aiELn5

  2. Andrew Regan

    *Left Foot Forward* "Tory cuts would “strangle” …": The Conservative party's economy policy would " strang… //bit.ly/cfZ5vo #labour

  3. Martin Johnston

    RT @leftfootfwd: Tory plans to "strangle" growth would cut GDP by at least £5 billion or 0.33% //bit.ly/aiELn5 #reasonsnottovotetory

  4. Mark

    Odd maths from Mandelson. He seems to think that cutting spending equates to taking money out of the economy. It’s a little bit more complicated than that mi Lord!

  5. Anon E Mouse

    Will – If Peter Mandelson, Yvette Cooper and Liam Byrne are so good at economics why didn’t they predict the recession?

    All three of this bunch were conspirators with 12 years of lies about “Ending boom and bust” and “First out of recession” and really it’s time they just shut up. Why should anyone believe this lot now? Everything with Labour is “This might happen” or “This would have happened”. The public know what HAS happened.

    Yesterday on the Politics Show, Mandelson blurted out like a spoilt child that “Cameron was disloyal to the UK” – it really was cringe making.

    Leaving aside the fact patriotism is the last refuge of a scoundrel and I do think when Boris Johnson flies to Davos in Economy and Mandelson is in First Class on the same plane, it is a bit galling.

    The fact is by pointing out the Tories are not going to go big on cuts plays the opposition game by reassuring any wavering voters that cuts will not hit so fast or hard.

    The truth is yesterday Mandelson looked as Andy Burnham sounded this morning on R4 – desperate. Weak and hunted and unable to get any message across.

    Can we please stop being reactive to the opposition and start acting like a government. Silly gimmicks like Aircraft Carriers and Emergency Commons statements for healthcare for the elderly look like election bribes.

    Labour has had 12 years now and look as ineffectual as they are….

  6. Mr. Sensible

    Cameron says one thing and his party’s administration at Nottinghamshire County Council do completely another.

    What did he say; a Tory government should be judged nationally on what it does locally?

  7. Tory spending cut ad disarray | Left Foot Forward

    […] Foot Forward reported this morning on Labour’s press conference where the confusion over Conservative spending cut plans were laid […]

  8. Anon E Mouse

    Mr. Sensible – Now you’re doing it.

    Cameron is in opposition – can everybody please stop acting like the Tories are in power already.

    Be proactive not reactive, it looks lame.

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