Clegg reveals balanced budget and debt cutting plans for 2015

DEPUTY Prime Minister Nick Clegg will set out two new tax and spending policies for the Liberal Democrats today, arguing for a balanced budget rule and a long-term reduction in public debt.

The Lib Dem leader is set to propose a “new debt rule” by which the Treasury would “significantly reduce national debt as a percentage of GDP year on year when growth is positive”.

Clegg will argue that once the structural deficit is eliminated in around 2017-18, the reduction of the national debt when the economy is expanding should become a principle of the UK’s public finances. He added that this could restore public debt to “sustainable levels around the middle of the next decade”.

The second suggestion is that the UK run a “balanced budget rule” once the structural deficit is eliminated.

“We'll balance the overall budget but we'll do it in a way which still allows us to invest in the things we and future generations need,” Clegg added. The policy would exclude capital investment.

The speech is Nick Clegg’s first policy announcement since his party’s near-obliteration in the recent European elections, in which it lost 10 of its 11 MPs.