LONDON (Reuters) - Britain’s political parties should work together to devise a credible plan for tackling a record budget deficit and not become distracted by a dispute over when to start a fiscal squeeze, the Liberal Democrats said.
Nick Clegg, the leader of Britain’s third-largest political party, told Reuters that the Labour government and the Conservatives were indulging in point-scoring before next week’s national election.
Opinion polls indicate Clegg’s support will be key in deciding which of the two main parties forms the next government after Britons vote on May 6.
“(There is) a strong case now for politicians across parties to be talking to each other, irrespective of the outcome of the general election, to come clean with people about how bad the structural deficit is and roughly what the framework is required to deal with it,” Clegg said in an interview.
“We will seek to play an active role, whether in opposition or government, in making sure that we develop a credible plan for sustainable deficit reduction,” Clegg said as he returned by train to London after campaigning on Friday in Sheffield.
At just under 12 percent of gross domestic product for the 2009-10 financial year, Britain’s budget deficit is proportionately approaching that of embattled Greece, which stood at 13.6 percent last year.
However, Britain’s debt position is regarded as much more secure as the average maturity of its government bonds is far longer than Greece’s. While UK public debt is rising sharply, it remains far lower than Greek debt as a proportion of GDP.
But the next government, whatever its colour, will have to cut spending and raise taxes to get the deficit under control.
“The (deficit) debate has become hijacked by a technical issue about exactly when you start fiscal contraction,” Clegg said. “The precise timing of fiscal contraction is much less important than whether you have actually got a credible plan to start dealing with the structural deficit.”
Prime Minister Gordon Brown and Conservative leader David Cameron had been “tearing strips off each other whether you do it next Tuesday or next Thursday,” he said.
The Conservatives are ahead in the polls but by too slim a margin to be sure of winning an outright victory, while an unexpected surge for the normally third-ranking Lib Dems has left them vying with Labour for second place.
Clegg, keen to maximise the Lib Dem vote, refuses to say which of the main parties he favours, saying he will be guided by the election’s outcome.
The Conservatives say Britain faces an economic crisis unless cuts to public spending start this year.
Labour plans to postpone spending cuts and tax rises till 2011, saying the economy needs more time to consolidate a modest recovery from the worst recession in generations following the global banking crisis.
The Lib Dems agree that cuts should be delayed. But Clegg denied this indicated political support for Labour and made clear his disagreement with Conservative policy.
“Us siding with Labour? It’s siding with common sense,” he said. “My eight-year-old (son) ought to be able to work this out -- you shouldn’t start slamming on the brakes when the economy is barely growing.
“If you do that you create more joblessness, you create heavier costs on the state, the deficit goes up even further and the pain with dealing with it is even greater. So it is completely irrational.”
Britain has not experienced an inconclusive election for more than 35 years and the prospect has unsettled currency markets where sterling is down nearly 10 cents against the dollar since mid-January..
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