Interest rates 'could rise without spending openness'

The Government's "lack of openness" over future public sector cuts and tax hikes could lead to a rise in interest rates, Tories warned today.

Shadow exchequer secretary David Gauke said a comprehensive spending review had been "kicked into the long grass" and the Treasury was "using uncertainty to suit themselves".



But Economic Secretary Ian Pearson said "pretty painful decisions" were needed and the Government would work to "eliminate waste, cut some budgets and stop some programmes altogether".



The exchanges came in the Commons during debate on a report on the UK's budget submitted to the European Commission at the end of last year.



Mr Gauke said that, as the slowest of all G7 economies to emerge from recession, the UK was in a "very difficult position".



He told MPs: "In those circumstances, the credibility of the plans to get us out of this mess is absolutely crucial...



"If our credibility is at risk and it clearly is, we will have to pay more for our debt and interest rates will rise unless something is done to address this."



Ministers had "obfuscated" in setting out any future spending detail, he said.



"This lack of openness, this lack of candour, is doing nothing for the credibility of this Government and for the public finances of this country."



But Mr Pearson said the Government took "bold action" in introducing a fiscal stimulus, which had proven to be effective. It was right to be "cautious" and not remove this support until recovery had been secured.



He warned: "Now's not the time to be engaging in rash cuts as the Conservatives want to do.



"There is a need for a judgment to be made in terms of when to make the necessary fiscal consolidation that will be required to ensure that we have sustainable public finances.



"There will be more to be done - not just now but over the next few years. This is going to involve some pretty painful decisions on public spending but it is right that Government faces those decisions."





Liberal Democrat spokesman Jeremy Browne said Alistair Darling and Gordon Brown were in a "state of complete denial" about the extent of the problem.

"We had the absurd spectacle of the Chancellor in his Pre-budget Report coming before us to tell us of all the tough measures he was taking in order to get to grips with the deficit and then announcing additional spending programmes which exceeded in value the amount of money he was saving with his austerity measures."



But the Tories had also shown they "don't have any meaningful proposals to reduce the deficit".



Mr Browne cautioned against cutting public spending too soon, warning "you do not switch off the life support machine until you are certain the patient is alive"..



Tory Eurosceptic Bill Cash (Stone) warned that the parlous economic situation in Greece could lead to a wider crisis in Europe.



Mr Cash, who was one of the leading opponents of the Maastricht Treaty in 1993, warned that even if Greece was bailed out, attention would turn to other weak economies in the eurozone.



"We have got ... a really serious crisis for the eurozone as a whole.



"I don't say that with any great satisfaction of gloating. All I say is I wish that people would have listened to those of us at the time, back in 1993."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Arts and Entertainment
Jamie T plays live in 2007 before going on hiatus from 2010
arts + entsSinger-songwriter will perform on the Festival Republic Stage
Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SQL Developer (TSQL, SSRS, SSAS) Fund Manager - London

£45000 - £50000 per annum + Benefits: Harrington Starr: SQL Developer (TSQL, S...

Software Developer (JavaScript, TDD, Jasmine, Angular.JS)

Negotiable: Harrington Starr: Software Developer (JavaScript, TDD, Jasmine, An...

Front-End UI/UX Developer (HTML5, CSS, JavaScript, jQuery, Ang

£45000 - £50000 per annum + Benefits + Bonus: Harrington Starr: Front-End UI/U...

C#.NET Server Side Developer (C#, XML, WCF, Unit Testing,SQL)

£30000 - £40000 per annum + benefits+bonus+package: Harrington Starr: C#.NET ...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition