Brown: deficit vital to survive recession
Updated on 02 February 2010
The prime minister defends the size of the state deficit, telling the Commons liaison committee it is vital to borrow to get the country through the recession.
Annual borrowing has reached £178bn, the highest level in history, but the prime minister told the House of Commons liaison committee the government's financial decisions have kept unemployment down and avoided business failures and home repossessions.
The session was often light-hearted, but Brown was more serious when he discussed financial matters.
He said: "If you were to cut that deficit too quickly and if you were to cut it now, this year, just as we are trying to get out of recession, then the economy would suffer, more jobs would be lost, more businesses would go under, more homes would be repossessed.
"It is not just a point of political controversy, the time you start to reduce the deficit. It is a matter of jobs, it is a matter of homes, it is a matter of businesses.
"Those people who want to cut the deficit immediately and cut it very fast are making a mistake with the economy, which needs the level of support we are giving it."
Mr Brown said the government has a clear plan for cutting the deficit by half within four years once financial recovery becomes firmly established.
Making his last appearance in front of the committee before the general election, he also insisted the Chancellor Alistair Darling was not "over-optimistic" in forecasting a return to 3.5 per cent GDP growth in 2011.
Mr Brown cited President Barack Obama's projection of 4 per cent growth over the same period and he denied he had been irresponsible in increasing borrowing.
He said: "I think it is right to have run a large deficit. I think it has been essential for us to have the recovery that is necessary for the economy.
"We have managed as a result of that, in the face of the biggest financial crisis the world has seen for 70 years, to maintain far lower levels of unemployment than we would otherwise have been able to achieve, saved businesses that might otherwise have failed and kept people from having their homes repossessed.
"Our level of deficit will be published in the Budget. Yes, it is a high level of deficit, but we have got the advantage of having started from a low level of debt, which meant we were flexible enough to be able to afford a deficit."
