LONDON, Jan 19 (Reuters) - British Finance Minister Alistair Darling said on Tuesday there should be no doubt about the government’s commitment to reducing the country’s record budget deficit.
Worries about the 178 billion pound deficit and the risk of a downgrade to Britain’s sovereign debt rating have sent shivers through bond markets in recent weeks.
Darling’s reluctance to set out immediate plans for reducing public spending over the next four years has fuelled concerns over the government’s intentions.
But Darling told the Financial Times in an interview he had been telling his ministerial colleagues for a year that the deficit had to be reduced.
”I made the point on numerous occasions ... that getting spending down, halving our borrowing in the four-year period was non-negotiable: it was absolutely essential.
“That does mean that, in terms of public spending, there will be cuts to some programmes; some programmes will be cut themselves; there will be some postponements, and people should be in no doubt about our commitment.”
He said there was still too much uncertainty around to conduct a spending review now.
The opposition Conservatives, favourites to win an election due by June, want an early start to spending cuts.
But Darling said taking “significant sums of money out of the economy at this stage is a risk to recovery.”
He dismissed suggestions by the Conservatives that the Bank of England would be able to protect the economy by offsetting tighter fiscal policy with a looser monetary stance.
“Well, interest rates look about as low as they can get,” he said, without elaborating.
The Bank of England slashed interest rates last year to a record low of 0.5 percent and embarked on an unprecedented 200 billion pound asset buying programme to help drag Britain out of recession.
A full transcript of the Financial Times interview can be seen at www.ft.com/darlingnews
Reporting by Tim Castle; Editing by Diane Craft