UK has underperformed peers on public finances-IFS

LONDON, April 19 (BestGrowthStock) – Britain’s public finances have
not performed as well as comparable countries under 13 years of
Labour Party rule, a think-tank said on Monday.

The opposition Conservatives seized on the report by the
independent Institute for Fiscal Studies (IFS) to criticise
Labour’s handling of the economy ahead of an election on May 6.
Labour defended its record, saying it was nurturing recovery.

The budget deficit is running at more than 11 percent of
GDP and how to bring it down without wrecking a fragile
recovery is a key issue in a closely fought campaign.

“By 2007 Labour had reduced public sector borrowing
slightly below the level it inherited from the Conservatives.
And more of that borrowing was being used to finance investment
rather than the day-to-day running costs of the public sector,”
the report said.

“But over the same 10 years the vast majority of other
leading industrial countries reduced their borrowing by more
than the UK. And most also reduced their debt by more,” it
added.

“So while the UK public finances were in better shape when
the financial crisis began than they were when Labour came to
power, the UK was in a worse position relative to most
comparable countries.”

Labour Prime Minister Gordon Brown, who was finance
minister for a decade from 1997-2007, has defended his
stewardship of the economy against opposition criticism that he
should have done more to improve finances when the economy was
flourishing.

Looking at the period since the credit crisis, which peaked
in 2008, the IFS detected a similar pattern.
“Once again, the UK public finances have underperformed
relative to comparable industrial countries,” it said.

The IFS said that slightly better figures published by the
Treasury in last month’s budget might have some impact, but not
change the overall picture

“It is unlikely to affect the broad conclusion that the UK
will have experienced one of the largest increases in
structural borrowing through the recession and thus will have
one of the weakest fiscal positions in 2010.”

Philip Hammond, an opposition Conservative economic
spokesman, attacked Brown’s record.

“This is a damning verdict on Gordon Brown’s economic
mistakes which left Britain badly prepared for the longest and
deepest recession since the war,” he said.

A Labour Party spokesman said debt had risen because of the
“biggest global economic crisis in modern times.”

“The extra support we’ve put into the economy is working,”
he said. Recovery is beginning and we’ve seen far fewer
businesses fail, fewer homes repossessed and lower unemployment
than predicted.”

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UK has underperformed peers on public finances-IFS