Clegg insists cuts will not strangle recovery

Deputy Prime Minister Nick Clegg yesterday rejected claims that the coalition’s swingeing spending cuts threatened the economic recovery.

Britain’s new Nobel Prize winning economist, Professor Christopher Pissarides, has warned that the Government was taking “unnecessary risks” at a time when the economy remained weak.

He accused Chancellor George Osborne of having “exaggerated” the threat of a Greek-style sovereign debt crisis unless drastic action was taken to tackle the UK’s record deficit.

But Mr Clegg insisted that the deficit had to be dealt with if economic prosperity was to be restored.

“There is nothing pro-growth about having this dead weight of debt around our necks, there is nothing pro-growth about spending £120 million-a-day just simply on the interest on our debt,” he told BBC1’s The Andrew Marr Show.

He dismissed claims the Government was cutting too swiftly, saying that the measures set out in Chancellor George Osborne’s spending review would be implemented “very evenly” over four years.

“I think there would be some validity to that criticism if what we were doing, we were trying to do it overnight, we were trying to do it pre-emptively, we were front-loading all the cuts,” he said.

Writing in The Sunday Mirror, Professor Pissarides said the threat of a Greek-style debt crisis was “minimal” and Mr Osborne should have been more concerned about the continuing weakness of the economy.

“It is important to avoid this ‘sovereign risk’. But in my view Britain is a long way from such a threat, and the Chancellor has exaggerated the sovereign risks that are threatening the country,” he said.

“Unemployment is high and job vacancies few. By taking the action that the Chancellor outlined in his statement, this situation might well become worse.

These risks were not necessary at this point. He could have outlined a clear deficit-reduction plan over the next five years, postponing more of the cuts, until recovery became less fragile. The ‘sovereign risk’ would have been minimal.”

Shadow work and pensions secretary Douglas Alexander said the spending review had “comprehensively failed the fairness test”.

“It is simply wrong to have a deficit reduction programme which takes more from Britain’s children than from Britain’s banks,” he told The Andrew Marr Show. He said Mr Osborne’s £7 billion of welfare cuts – on top of the £11 billion already announced in the emergency Budget in June - were part of a deliberate “political strategy”.

Labour accused Mr Clegg of treating the expected job losses as a result of the Government’s spending cuts as “just a statistic”.

During the interview the Deputy Prime Minister was asked about a report which suggested that as many jobs would be lost in the private sector as the public sector. He replied: “You can trade statistics if you like”.

Mr Alexander said: “We knew that the Tories think that unemployment is a price worth paying but now we know that Nick Clegg thinks his own Government’s plan to cut 490,000 jobs in the public sector is just a statistic.”