Page last updated at 23:29 GMT, Monday, 20 October 2008 00:29 UK

Brown defends 'record' borrowing

Gordon Brown on the ''economic downturn'' facing world economies

Gordon Brown has rejected criticism of record levels of government borrowing - saying it was the "right policy" during the current economic climate.

The prime minister insisted to MPs that the UK was in a "stronger position than at any other downturn" and could borrow now because of debt already paid off.

But Conservative leader David Cameron said forecasters believed government borrowing could reach 64bn this year.

He asked why the "cupboard was bare" when firms and families needed help.

The exchanges came during a Commons debate on the prime minister's statement about last weekend's EU summit.

They followed figures showed government borrowing has hit a record 8bn in September - bringing the figure for the year so far to 37.6bn.

We will bring the same focus and determination to the task of safeguarding jobs and homes and small businesses
Gordon Brown

Amid warnings that the UK has already tipped into recession, Mr Brown said: "The United Kingdom cannot insulate itself from this global downturn.

"But with interest rates low and falling, inflation expected to come down over the next year, these underlying economic indicators - particularly interest rates - make us stronger than at any other previous downturn.

"Debt has been considerably lower than a decade ago, and lower than all G7 countries except Canada, enabling the government to increase borrowing at the right time to support the economy."

'64bn question'

He added: "We will bring the same focus and determination to the task of safeguarding jobs and homes and small businesses, as we have done to avert the threatened meltdown of financial systems.

"This will be the central mission of this government over the coming weeks and months."

However, Mr Cameron said: "Isn't it the case that Britain is heading for a record budget deficit, contrary to what he said, put by some independent forecasters as high as 64bn?

"Will he confirm that has happened after 14 years of economic growth, and when half the OECD are entering the downturn with a budget surplus?

"Isn't the 64bn question this: why, when business and families need more help, has he left the cupboard so bare?"

'Ignored advice'

Mr Cameron added that the UK was "entering this downturn with the highest government deficit in the industrialised world".

Liberal Democrat leader Nick Clegg said Mr Brown had "ignored advice from us stretching back years... about the unsustainable nature of the credit and housing boom".

By any standards the latest reported levels of public sector borrowing are eye-watering
Hugh Pym, BBC Economics Editor

He welcomed the recent rescue package for struggling banks, but said the idea had not been the prime minister's.

Mr Clegg added "He was right to copy the Swedish model of bailing out their banks as they did in the 1990s and I'm glad that he persuaded other European leaders to copy his copy."

Speaking on the BBC's Newsnight programme, former Treasury minister Geoffrey Robinson said capital expenditure projects should be brought forward to give a boost to the economy.

But, for the Tories, John Redwood said any economic stimulus needed to come from the private sector.

The government borrowed a record 8.092bn last month, according to the Office for National Statistics - up from 4.775bn in the same period in 2007.

The amount borrowed so far this financial year stands at 37.6bn - the highest since records began in 1946.

Meanwhile, the Council of Mortgage Lenders has reported that total lending last month was 17.7bn, down 10% from August and 42% lower than in September last year.



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC iD

Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific