David Cameron dodges debt target question
Wednesday 12 September 2012
David Cameron today dodged questions about whether the coalition would stick to a key debt reduction target.
Speculation is mounting that the Government could drop the commitment to putting state debt levels on a downward path by the end of the parliament.
Lower tax receipts and a bigger benefit bill have driven borrowing sharply higher over the summer and economists have expressed scepticism that the goal can be achieved.
The Prime Minister was pressed on the issue as he answered questions in the Commons this afternoon.
Labour leader Ed Miliband said: "We gather today that the Government may miss the overriding economic test he set himself, which is that debt will be falling by the time of the next election.
"Isn't the fact that he is failing the very test that he set himself the surest sign yet that his plan is not working?"
Mr Cameron responded: "This Government in the last two years has cut the deficit by a quarter."
Challenged again to confirm he was "sticking to that promise" despite rises in borrowing, the premier said: "It is this Government that has cut the deficit that we inherited by a quarter."
Mr Cameron accused Labour of voicing concern about borrowing while proposing measures that would increase it.
The independent Office for Budget Responsibility is due to update its forecasts for public sector net debt relative to GDP in time for the Chancellor's autumn statement on December 5.
If it predicts George Osborne is likely to miss the fiscal mandate, he will face a stark choice between abandoning the goal or imposing deeper spending cuts.
Senior Liberal Democrats, including Business Secretary Vince Cable, have argued that the economy's main problem is a lack of demand, suggesting they would not support further curbs.
However, Mr Osborne is thought to be hopeful that initial economic figures could have exaggerated the problems, and borrowing this year could end up lower than many fear.
A Treasury spokesman stressed no decision had been taken to drop the debt commitment.
"The Government is committed to its fiscal policy, which shows our plans meeting our targets," he said.
"This is delivering a reduction in the deficit and credibility in the markets that means we have been able to make the further reforms for lending to businesses and guarantees for infrastructure investment announced in the past few weeks.
"We are not going to start second guessing the OBR forecast that hasn't been put together, and that will draw on some months of data that haven't yet been produced."
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