SHADOW chancellor Alistair Darling yesterday warned massive spending cuts could push Britain into a long-term Japanese-style slump.
He claimed massive spending cuts and a sharp hike in VAT – both announced by George Osborne in his inaugural Budget yesterday – would depress demand and send the economy into a period of stagnation.
“You have a situation where you have fragile growth, you are taking a lot of money out of the economy, and both public and private sector will be affected,” he said.
He added: “I worry that not just Britain but Europe is going to enter into a situation like in Japan where you bump along the bottom.
“Crucially, that causes not only higher unemployment but you don’t ever get your debt and deficit down.”