Downing Street Says

» Monday, November 10, 2008

Economy

Asked if the Prime Minister was planning an announcement on taxes, the Prime Minister s Spokesman (PMS) told the assembled press that announcements on taxes and spending and borrowing were traditionally matters for the Chancellor in the Pre-Budget Report and the Budget.

Put that in his GMTV interview this morning, the Prime Minister talked about tax cuts being a way of getting economies moving again, the PMS replied that as the Prime Minister and the Chancellor had been saying recently, it was right that fiscal policy should support monetary policy. As the Chancellor had said in his Mais Lecture, increasing borrowing in a downturn was sensible in order to support businesses across the economy.

This was now becoming increasingly the accepted view across the world. We had seen action yesterday from China and we saw action last week from Germany. The European Commission had relaxed its rules on the Stability and Growth Pact and we had also seen the debate in America.

In terms of specifics and the actual judgement, that was a matter for the Chancellor to announce in the PBR and the Budget.

Asked if the Prime Minister thought that there was enough evidence out there to suggest that money given to people through tax cuts would be spent in the economy, the PMS said that what the Prime Minister believed was what he had said on Friday and what the Chancellor had said in his Mansion House speech. It was sensible to increase borrowing in a downturn and that was the right way to support the economy at this time. On specifics, these were all judgements and matters for the Pre-Budget Report.

Put that the Prime Minister had often argued in the past that tax cuts did not directly benefit the economy, the PMS replied that we had to look at all of these issues relating to tax, public spending and borrowing and these were all issues for the Pre-Budget Report as the Prime Minister had been making clear.

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Economy

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