INTERVIEW-UK’s Darling says PBR measures show credible debt plan

December 10, 2009
UK's Darling: credible plan

UK's Darling: credible plan

    By Matt Falloon and Sumeet Desai
   LONDON, Dec 10 (Reuters) – The government’s pre-budget report will soothe concerns about Britain’s fiscal deficit and it would not be sensible to impose cuts any sooner, finance minister Alistair Darling told Reuters in an interview.
   Darling announced a rise in national insurance contributions on all but the poorest and slapped a one-off tax on bank-bonuses in Wednesday’s PBR to help tackle the growing deficit.
   “The steps that we have taken will reassure people that we have a credible, deliverable, realistic and fair plan to cut government borrowing over a four-year period,” Darling said on Thursday.
   “If you brought the process forward a year you would have to find another 26 billion pounds. I just don’t think that would be sensible.”
   Darling revised up his 2009/10 borrowing forecast marginally to 178 billion pounds on Wednesday and reiterated his commitment to halve the deficit over a four-year period.
   The UK government bond market initially took some comfort from that, but prices plunged on Thursday as investors worried the government was not going far enough to reduce its debt.
   Darling said now was not the right time to take drastic action on spending, with Britain yet to emerge from recession.
   “We are at a situation just now where things are still pretty uncertain,” he said.
   “I want to make sure we support our economy into recovery but after that, make no mistake about it, the fact that government borrowing will have to come down by half over a four-year period will mean you have got some pretty difficult decisions to be taken right across the board.”
   The government revised higher its forecast for growth after 2011, which Darling said was achievable.
   “I am confident we can get that growth.”
   He added that the 50 percent levy on bank bonuses over 25,000 pounds was a one-off measure intended to alter behaviour in the financial sector.
   ((Writing by Fiona Shaikh; Tel. +44 207 542 2774))
Thursday, 10 December 2009 09:21:42RTRS [nLAK002517] {C}ENDS

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