Cameron, Osborne hit back at critics over weak economy
LONDON (Reuters) - The Conservative-led government said on Sunday it would ease planning laws and boost lending to small businesses to revive the struggling economy, seeking to deflect calls for a major change of tack.
Prime Minister David Cameron and Chancellor George Osborne are under growing pressure as their flagship austerity plan fails to stimulate growth.
A reshuffle is widely expected early this month, with some pundits and even one Conservative MP openly suggesting Osborne could be replaced, although insiders say Cameron is likely to leave Osborne in place.
David Davis, a senior MP from Cameron's ruling Conservative Party on Sunday called for an "alternative" economic policy, days after another Conservative politician goaded Cameron by asking whether he was a "man or a mouse".
With parliament due to reconvene on Monday after the summer recess, Cameron hit back in an article in the Mail on Sunday headlined "Cameron roars: I'm no mouse".
"Frankly, I am frustrated by the hoops you have to jump through to get anything done - and I come back to parliament more determined than ever to cut through the dither that holds this country back," he said in the article.
Osborne on Sunday defended his record, adding that the government, which is half way through its term, would speed up construction plans and that legislation would be announced next week allowing it to underwrite infrastructure projects.
"Our economy is healing, jobs are being created. It is taking time, but there is no easy route to a magical recovery," he told the BBC.
"We have to do more and we have to do it faster," he said.
Britain's economy has shrunk for three consecutive quarters, and although data in August showed the latest quarterly contraction was smaller than first thought, the wider picture of economic weakness remains little changed.
Restrictions on construction in rural areas, or the green belt, have hampered building in some parts of Britain, and Osborne said he would like to see more schemes in which land is newly designated as green belt to free up other parts of the countryside for housing and other projects.
One potential infrastructure project that has become highly controversial is a third runway at Britain's largest airport Heathrow, something explicitly ruled out by the Conservatives in their pre-election manifesto and opposed by environmental groups and people living nearby.
Osborne said "all options" should be examined, but political consensus must be reached. Foreign Secretary William Hague on Sunday told Sky News a third runway was not an option, and the Conservatives' partners in coalition government, the Lib Dems, also oppose the move.
SMALL BUSINESS BANK
Osborne said the low level of bank lending was one of the economy's key weaknesses, and proposed a "small business bank" to bring together existing schemes to boost lending to small businesses, and potentially giving the bank additional powers.
The Treasury could not immediately provide more detail.
John Longworth, Director General of the British Chambers of Commerce, welcomed the move.
"We are heartened that the chancellor and his colleagues are actively considering our long-standing proposal for a British business bank. This institution .... would be a game-changer for long term growth," he said.
The Labour party was less impressed, blaming the lack of construction in Britain on cuts to public investment and a lack of confidence in the economy.
"Despite a double dip recession which has pushed borrowing up by a quarter so far this year, it's clear that George Osborne has no new ideas. The chancellor seems desperate to cling on to his failing plan, regardless of the long term damage," Labour finance spokesman Chris Leslie said.
Lib Dem leader and Deputy Prime Minister Nick Clegg also faces heat from his party as it seeks to boost its slumping opinion poll ratings before the next election in 2015.
The Sunday Times carried comments from lawmaker Adrian Sanders calling Clegg "bumbling" and another senior party member Arthur Smith warning that Clegg was not "indispensable", tipping Business Secretary Vince Cable as his replacement.
(Editing by David Milliken and Philippa Fletcher)
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