Nick Clegg urges resolve in cutting debt

There must be "no blinking" on the Government's programme of deficit reduction, Deputy Prime Minister Nick Clegg will say today, as he insists the shared agenda of cutting debt is the "glue which binds this coalition together".

The Liberal Democrat leader, who has faced grassroots discontent over the scale of spending cuts in the wake of his party's poor showing in this month's elections, will insist the Government must "hold our nerve" and press ahead with its plans to restore economic stability.

But he will risk ruffling feathers among his Conservative coalition partners by appearing to trace the origins of the 2008 financial crisis to Margaret Thatcher's administration of the 1980s.

Calling for a "new, liberal economy" with a focus on investment and stability rather than speculation and debt, Mr Clegg will say that it is time to "turn the page on... an era that began with a big bang and ended with a monumental crash".

The Big Bang was the popular name for Lady Thatcher's 1986 deregulation of the markets, which opened the way for massive growth in the City of London's financial sector.

Speaking to the CBI in London this evening, Mr Clegg will call for a move away from the short-termist debt-driven economy of recent decades and towards a "less spectacular" but "more prosperous and more profitable" future.

He is expected to say: "The economy is out of the danger zone. But we need to hold our nerve. That means no blinking on deficit reduction.

"The Government has a plan to restore stability and we will stick to it."

Liberal Democrats and Conservatives "may differ on the nature and shape of the state, but we agree its finances must be sound," Mr Clegg will say.

"Tackling deficit is a necessary response to an immediate emergency. It is the glue that binds this coalition together."

And he will tell his business audience: "If we get this right, if we build the new, liberal economy I have described, we can begin to turn the page on an era of short-termism in our economy:

"An era that saw the return of boom and bust, driven by a banking system that risked everything for higher profits while households racked up huge private debt and the nation was run recklessly into the red;

"An era that began with a big bang and ended with a monumental crash.

"We can lay the foundations for an economy where people invest rather than simply consume, where stability is as valuable as risk... where people borrow responsibly and their governments do too.

"It may be less spectacular - sturdy and steady instead. And we can't get there overnight - this is a generation's work.

"But it is a better, more prosperous and more profitable future."