Way.... a weekly column from the Rt. Hon. Michael Howard QC. MP.
4 February 2010
The beginning of this week was marked by an intense controversy over the timing of the reduction in Government spending which is bound to come up after the election whoever wins. This is a matter of great importance which will have a considerable bearing on our economic future.
At present the Government is borrowing £178 billion; 13% of our national income. Everyone agrees that his is something that can’t continue. The Government proposes to spend and borrow more next year but to reduce both spending and borrowing thereafter.
The Conservative position is that a start, at least,
must be made in reducing spending and borrowing sooner.
If, on the other hand, they have no confidence that
spending and borrowing are to be brought under control they will demand
higher interest rates if they are to continue to lend to us. And if
interest rates start to rise the outlook for us all becomes even more
difficult than it now is. Mortgages would become more expensive as would
the borrowing which business must undertake if firms are to grow or, in
some cases, survive. So perhaps the worst thing that could happen to
imperil our recovery from recession would be a rise in interest rates.