British Business Secretary Vince Cable has urged Chancellor George Osborne to change his economic course by borrowing more in order to stimulate growth in the economy.
Writing in the New Statesman, Cable criticized Osborne for sticking to his plans at current time of economic crisis and sluggish growth.
The Liberal Democrat called for extra borrowing and warned that the coalition’s resistance on the issue may no longer be the right approach.
He also said that the Chancellor’s deep cuts to capital spending have had adverse “economic consequences”.
“The IMF argued last May that the risk of losing market confidence as a result of a more relaxed approach to fiscal policy, particularly the financing of more capital investment by borrowing, may have diminished relative to the risk of public finances deteriorating as a consequence of continued lack of growth,” he wrote.
The Chancellor, however, has so far rejected calls for a change in fiscal policy, arguing that abandoning the discipline of spending cuts and borrowing for growth “would not undermine the central objective of reducing the structural deficit.”
British Prime Minister David Cameron also dismissed Cable’s suggestions, saying that increasing government expenditure or cutting taxes would not help Britain’s struggling economy.
Earlier in February, credit ratings agency Moody’s downgraded the British government’s bond rating from the top AAA to AA1 due to Britain’s rising debt and slowing growth.
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