Labour Complains About Borrowing, Suggests More

Ed Miliband chastises the government for borrowing when he would borrow even more.

British Labour Party leader Ed Miliband speaks in Gateshead, England, February 8, 2011
British Labour Party leader Ed Miliband speaks in Gateshead, England, February 8, 2011 (Flickr/Ed Miliband)

Britain’s Labour opposition leader Ed Miliband on Wednesday rightly complained that the government is on track to miss its fiscal targets and adding more to the national debt than it envisaged, yet his party would borrow even more in an attempt to stimulate growth.

Miliband, who was elected Labour leader after the 2010 general election, told Parliament that Prime Minister David Cameron’s administration is “borrowing £212 billion more than he promised.” The Conservative Party premier claims that is paying down Britain’s debt “but the debt is rising,” said Miliband.

Disappointing growth figures have forced the coalition government, which includes the third party Liberal Democrats, to extend its deadline for reducing the debt as a percentage of gross domestic product from the next election, scheduled for 2015, to the 2016-2017 financial year.

The government has reduced the deficit by a mere quarter while public-sector spending in real terms has continued to increase. It was almost 4 percent higher in 2011 than in 2009, Labour’s final full year in power. Borrowing last year was higher than in the year before. The Treasury expects to spend £756 billion by the time of the next election compared with £683 billion in 2012.

According to Labour, the mild contraction in the fourth and final quarter of last year, when the economy shrank .3 percent, showed that Cameron’s supposed austerity program isn’t working. Even if some one million private-sector jobs have been added since the Conservative came to power, Britain’s economy is still 3.3 percent smaller than during the first quarter of 2008.

Which is why Labour advocates fiscal stimulus, including infrastructure investments, to encourage economic activity — that would raise the deficit even further. Cameron naturally wondered, “If the right honorable gentleman thinks there’s a problem with borrowing, why does he want to borrow more?” A question that Miliband couldn’t answer except to suggest that the government is “borrowing for failure” — whatever that means.

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