Vince Cable launches attack on 'right wing nutters'

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Indy Politics

Business Secretary Vince Cable today launched an extraordinary attack on "right wing nutters" in the US who are threatening to cripple the world economy.

Mr Cable said the row over whether to raise the American government's debt ceiling was a more serious crisis than the eurozone's problems.

Speaking on the BBC's Andrew Marr show, he also suggested the Bank of England may have to engage in more quantitative easing - effectively printing money - as growth stalls.

Mr Cable said the deal struck in Europe last week to bail out countries such as Greece and Ireland had been a "significant step forward", without solving the fundamental issues.

But he added: "The irony of the situation at the moment, with markets opening tomorrow moning, is that the biggest threat to the world financial system comes from a few right-wing nutters in the American congress rather than the eurozone."

Mr Cable said the Government wanted to see the euro succeed, even though Britain was not a part of it.

With GDP figures this week expected to suggest that growth has stalled, the senior Liberal Democrat conceded that the economy was "not great".

"It isn't great, and it is not surprising that it isn't great because of the problems we inherited," he said.

He said the problems were "not easy", but dismissed the idea of easing the coalition's austerity measures. The UK was in a "German rather than Greek" position because there was confidence in the finances, he said.

There was also evidence of "rebalancing" in the economy, and the "beginning of the rebirth of manufacturing and exports".

Mr Cable went on: "There is a genuine problem with demand, consumer demand. Again, it is not surprising there have been big shocks, world commodity prices going up has had a big effect on confidence here."

The Cabinet minister said QE was "in reserve" and would be the "right approach" if demand remained suppressed.

"The Bank of England is an independent body, we need to stress that, they need to make their own judgments...

"But if there is a sustained period of weakness of demand the right approach to that is not for the Government to relax its fiscal discipline - we have to keep that going.

"But it is about the Bank of England pursuing policies of low interest rates that also helps keep our exchange rate down and helps exports.

"But also using the expansion of QE perhaps in more imaginative ways, not just acquiring government securities... If we have a continuing problem of weak demand that is the way to deal with it."

Mr Cable was asked whether the Government would be blaming one-off factors such as the Royal Wedding bank holiday if the growth figures were poor - a reference to a previous quarter where Chancellor George Osborne highlighted cold weather.

"No I won't, because I think we do realise that it is difficult," Mr Cable replied.

He said the problem was not just getting growth started again, but getting it started in a "sustainable way".