BIRMINGHAM, England (Reuters) - The government is not even discussing a retreat from its aggressive programme of budget austerity, Treasury Minister Danny Alexander said on Wednesday, dismissing reports some ministers are pushing for fiscal stimulus for the economy.
British media reported late on Tuesday that some ministers in the cabinet had raised the prospect of spending an extra 5 billion pounds on infrastructure to boost growth.
“That’s not the conversation that is going on. The conversation that is going on is about how do we make the best of the money that we have set aside,” he told Reuters on the sidelines of his Liberal Democratic party conference.
“The supply side reform agenda that we do have, to do with planning, regulation, skills, infrastructure, if we get them right and deliver what we said ... can help over time to raise the potential of the UK economy,” he said.
Even tentative proposals for more spending would be the first crack in the government’s resolve to stick to a path of searing budget cutbacks that have gained financial markets’ favour but left it open to criticism that it was going too fast and giving the economy no chance to grow.
Alexander said the focus was rather on business-friendly measures to help the private sector and on delivering infrastructure projects on time would help Britain ride out a rocky road to recovery.
He said the government was “leaving no stone unturned” to identify extra measures that could help companies, he said.
The government has already announced an acceleration of key infrastructure projects and is reviewing further measures to help business grow while keeping to its four-year austerity plan.
“In the end this recovery is going to be led by the private sector, that’s the only way we can get the economic growth that we want,” Alexander said.
Economists have highlighted the threat that some companies and sectors may never recovery sufficiently to deliver the growth needed to eliminate the deficit on the government’s timetable.
Any new growth plans are expected to be announced in late November when the Office for Budget Responsibility publishes its latest set of forecasts.
Those figures are expected to indicate a worsening outlook after the IMF cut its forecasts for Britain on Tuesday and said the coalition should slow its spending cuts if growth turned weaker.
John Cridland, head of the CBI business lobby, said the government should work with the private sector to get capital projects moving.
Alexander said the IMF figures reflected his opinion that Britain faced “a long and slow road to recovery” and said the government’s policy remained correct.
“My view (on the economy) has not changed as a result of the IMF figures,” he said.
“We have the right stance. I agree with the IMF that Britain’s policy stance is appropriate, that we should stick to the plans that we have set out, that’s what Christine Lagarde, head of the IMF said, when she was in the UK ..... and that’s what we’re doing.”
He rejected calls from the opposition Labour party to relax the spending cuts to boost the economy, which has barely grown since last September.
“People think there is some magic wand that government can wave, just borrow a bit more and spend a bit more, and suddenly everything will be OK,” he said.
“We are recovering from the deepest recession that this country has seen for many decades, a financial crisis, we have a huge debt overhang in this country, and in those circumstances there is no easy answer to those problems.”
Editing by Patrick Graham