Lib Dems cling to coalition and austerity drive

BIRMINGHAM, England Wed Sep 21, 2011 12:56am BST

Nick Clegg, leader of the Liberal Democrats listens to a speech from Business Secretary Vince Cable during their annual autumn conference, in Birmingham, September 19, 2011. REUTERS/Darren Staples

Nick Clegg, leader of the Liberal Democrats listens to a speech from Business Secretary Vince Cable during their annual autumn conference, in Birmingham, September 19, 2011.

Credit: Reuters/Darren Staples

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BIRMINGHAM, England (Reuters) - Deputy Prime Minister Nick Clegg will underscore his Liberal Democrats' commitment to coalition government with the Conservatives and their flagship austerity plan when he closes his party conference on Wednesday.

Clegg will list the party's achievements in government and paint a sunny picture for his party's future, despite low poll ratings and dire assessments of the flagging economy in a speech to Lib Dem members in Birmingham.

"As Liberal Democrats we act for the whole nation. In our long, proud liberal history, we have never served the media moguls, the union barons or the bankers," he will tell party members according to extracts of his speech released in advance.

"We do not serve, and we will never serve, vested interests. We are in nobody's pocket. That's why we speak up, first and loudest, when the establishment lets the people down."

Out of power for decades, the Lib Dems joined the Conservatives in coalition government last year, with the aim of winning credibility by helping to reduce Britain's big budget deficit through deep government spending cuts.

Clegg hopes voter gratitude for a reversal of Britain's economic slump by the next election in 2015 will assuage the anger felt by many over the compromises his party has had to make to rule with the centre-right Conservatives.

The Lib Dems say they have made the austerity programme fairer than it would have been under a Conservative administration, but a reversal on a pledge not to raise university tuition fees hit the party particularly hard.

The weak health of the economy cast a shadow over the conference, with the International Monetary Fund on Tuesday cutting its growth forecasts for Britain.

Lib Dem ministers said the economy faced a long, slow road back to growth, with Business Secretary Vince Cable telling the conference that Britain faced a crisis that was the "economic equivalent of war."

In response, Clegg and his senior ministers have reiterated they will stick to the coalition's four-year deficit cutting programme, while at the same time outlining plans to free up infrastructure expenditure to boost growth.

Cable has called for the Bank of England to add further stimulus by reopening its quantitative easing programme of buying assets, as a way to find extra credit for small and medium sized companies.

Senior party member David Laws, a close ally of Clegg, said the coalition was correct to hold its line on the four-year austerity plan despite concerns the economy may not grow fast enough to shrink the budget deficit.

"If you are going to deploy some important policy weapons you don't do so on the basis of one or two months of data," he told Reuters.

"If we kept on changing the temperature of the bath water every time we detected some minor shift, we'd have bursts of cold and warm water going through," he said.

The Lib Dems' poll ratings are less than half than when they came to power, and a Reuters/IpsosMORI poll on Wednesday showed 65 percent of Britons regard the party as divided and only 16 percent see it as likely to keep its promises.

The party has been careful during the conference to present a united front, and there has been little evidence of the rifts that characterised previous meetings while in opposition.

In the absence of a quick economic turnaround, the party hopes to bolster support by highlighting its policy successes and the moderating influence it says it has had on the Conservatives' right-wing tendencies.

Lib Dem officials have made several jibes at their Conservatives partners, pleasing grassroots members, but they have also been at pains to reiterate their commitment to the coalition, behaviour they says shows the party is fit to rule.

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