Vince Cable, the Liberal Democrat finance spokesman warned this week that Britain risks sliding into a Greek-style fiscal crisis unless the next government takes drastic action to cut borrowing.
Taxes must rise sharply over the next decade to bring down borrowing, according to the National Institute of Economic and Social Research. They suggest that taxes will have to rise by the equivalent of a 6p in the pound on income tax! They also said the UK economy faces sluggish growth and rising unemployment this year.
The Governor of the Bank of England governor Mervyn King is reported to have warned that “Whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be.”
Who would want to take the economic reins of power in such a scenario?
I ask another question – ‘In such dire circumstances who will be best suited to reduce the government debt, oversee a much needed restructuring of the banking sector, whilst protecting the vulnerable from cuts in vital government services?’ It will not surprise you that my answer this question is Vince Cable, Nick Clegg and the Liberal Democrats.
The next government could make the situation a lot worse. We need sound financial judgement if we are to recover and not sink into a second recession. Vince Cable and the Liberal Democrats have consistently got the analysis right over the economy. We must tackle government debt without choking off the economic recovery
We cannot afford to take a leap in the dark with Osborne and Cameron. Many people are fearful of the mass job losses and VAT increases likely to follow a Conservative win. Cuts and tax increases will be needed but who will bear the brunt of these?
Vince says, “The public will accept austerity for a time if the burdens are fairly shared”.
Vince Cable and the Lib Dems are determined to make our tax system fairer and we would raise the tax threshold so that nobody earning less than £10,000 would pay any income tax. This would be paid for by a tax on mansions worth over £2million, closing tax loopholes and making airlines pay for the pollution they cause.
Raising the tax threshold will benefit the average tax payer by £700 per year, but it will also have the added benefit of greatly increasing the incentive to work rather than languish on benefits.
Our manifesto sets out a carefully costed plan of cuts and spending commitments that would result in a £10billion cut in the deficit. Much more needs to be done and that will include hard choices about benefits and public sector pensions for example.
Nick Clegg proposes a ‘Council on Financial Stability’, involving representatives of all parties, the Governor of the Bank of England and the Chair of the Financial Services Authority. We face the kind of dire circumstances that require all Parties to work together if we are to avoid major social division when cuts and tax rises are implemented.
A strong Liberal Democrat presence in Parliament will ensure a wise, prudent and compassionate approach to the crisis we face.