The Prime Minister has given another strong indication that there could be large-scale tax cuts in next week’s Pre-Budget Report.
Gordon Brown also welcomed the IMF’s call for governments to introduce fiscal stimulus packages – increasing spending and cutting taxes – to boost the global economy.
He said the UK was ready to play its part in the process, telling reporters: “Britain, like many other countries in Europe, is ready to make its contribution for a temporary and affordable fiscal stimulus.
“It is now clear that the need for an urgent fiscal stimulus, within a medium-term framework of fiscal sustainability, is overwhelmingly accepted across the world.”
Mr Brown rejected the Conservative claim that borrowing now to pay for tax cuts and additional spending will store up economic problems for the UK in the future.
Shadow Chancellor George Osborne claimed that the Government’s policies were creating a “danger of having a proper sterling collapse, a run on the pound”.
Mr Brown also held out the prospect of falling inflation over the coming year delivering relief to hard-pressed families.
And he insisted that any extra borrowing now would come in the context of a “medium-term framework of fiscal stability” – which many observers will interpret as an admission that taxes will need to rise once the economic crisis is over. more