Britain’s faltering economy could slip back into recession but government action to boost growth is likely to help the country avoid another downturn, Business Secretary Vince Cable said on Wednesday night.
10:38PM BST 19 Oct 2011
Asked if he could promise that Britain would not experience a double-dip recession, Cable said: “I can’t do that. We know conditions are very difficult but the government is doing the best it can to protect people.”
The economy has barely grown over the last year, inflation is at a three-year high and households are feeling the pain from rising unemployment and weak wage growth.
Prime Minister David Cameron’s coalition Government is under mounting pressure to do more to stimulate the economy to avoid a return to recession. The last downturn ended in the second quarter of 2009.
The government’s options are limited by its commitment to cut a budget that peaked at around 11pc of gross domestic product. It is cutting public spending and raising taxes to try to balance the books.
Asked if it was time for the Government to adjust its austerity programme, Cable told ITV News at Ten: “There is no point pretending this isn’t difficult … the basic discipline is not something the government is doing enthusiastically.
“We are not masochists … but we are also doing positive things looking at how to create growth through business.”
While the “brutal reality” is that Britain’s economy has weakened over the past two years, the Government is certain it can find a way out of the crisis, Cable added, according to extracts of the interview released before it was aired.
The Labour Party said the government must urgently rewrite its spending plans to rescue the economy.
“It is time this Government actually took responsibility for their reckless decision to cut spending and raise taxes too far and too fast which has crushed our economy,” Labour business spokesman Chuka Umunna said in a statement.
Bank of England policymakers voted this month to pump another £75bn into the economy to boost growth. Minutes from their last policy meeting, released earlier on Wednesday, showed they considered injecting even more cash into the system.