PRIME Minister David Cameron has launched an aggressive defence of his government’s management of the economy, insisting that “there is no alternative” to the coalition’s plans for austerity – an echo of the phrase famously used by former PM Margaret Thatcher.
Speaking on the fourth anniversary of record low interest rates, Cameron also hinted that he wants the Bank of England to chip in with extra monetary stimulus.
The Bank yesterday confirmed that interest rates will be held at 0.5 per cent, where they have been anchored since March 2009. The Monetary Policy Committee opted against more quantitative easing (QE), yet many City economists still expect QE to edge towards the £450bn mark this year.
“By sticking to our deficit reduction plans we can keep interest rates low,” Cameron said, also hailing the Funding for Lending Scheme created by the government and the Bank as an example of “monetary activism”.
“That’s our plan: fiscal responsibility, monetary activism and restoring our competitiveness.”
The PM insists that neither higher spending nor deeper cuts are feasible, despite business secretary Vince Cable suggesting on Wednesday that more borrowing could be used to fund a splurge on infrastructure projects.
“There’s no magic money tree to fund this ever more wishful borrowing and spending,” Cameron said. “Labour’s plan is completely incredible, and we won’t be following it. We’ll be sticking with ours.”
The government has struggled to tighten purse strings, with central government current spending reaching £525.6bn in the fiscal year to January – up 2.7 per cent on the previous year, according to official statistics.