UK Politics

Nick Clegg: We will do more to encourage growth

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Media captionNick Clegg: "These are very turbulent times in the markets"

Deputy Prime Minister Nick Clegg has told the BBC ministers will "do more" to encourage growth in the UK economy.

Chancellor George Osborne also pledged "further action" in the autumn in a Daily Telegraph article.

The latest GDP figures suggest the economy is barely growing - business group the CBI has lowered its growth forecast for the UK in 2011 to 1.3%.

Labour's Ed Balls has said the government's cuts have gone too far, too fast and have choked off recovery.

Last week, stock markets tumbled amid concerns about the eurozone debt crisis and fears about US growth, prompting emergency statements from the European Central Bank, G7 finance ministers and the International Monetary Fund.

Mr Clegg told the BBC that recent events had demonstrated "the necessity" of the government's economic programme - Chancellor George Osborne last year outlined plans to cut spending and raise taxes in an effort to eliminate the structural budget deficit by 2015-16.

Growth review

Asked whether he agreed with his fellow Lib Dem cabinet minister Vince Cable, that the Bank of England should consider another round of "quantitative easing" - where the Bank pumps new money into the financial system to try to boost bank lending - Mr Clegg said that was a matter for the Bank.

But he added: "Of course, all of us in government are constantly looking at ways of making sure that not only we get on top of the public finances - which is a necessary but not sufficient condition for growth - but that we do our bit to stimulate growth, whether that's cutting taxes for businesses, removing unnecessary regulation which is hindering businesses, investing in new technologies through the Green Investment Bank.

"There is a whole raft of things we're doing and we will do more as we develop our growth review."

A final report on the government's growth review, launched last year, is due in the autumn.

Mr Osborne wrote in an article for the Telegraph on Monday that the government had a plan for growth which included lower corporation tax rates, less regulation for small firms, welfare reform, planning changes and lower taxes for entrepreneurs.

But he added: "We will take further action this autumn. Indeed this crisis provides an opportunity to make some difficult trade-offs in favour of growth that might get parked in the 'too difficult' box in calmer times."

Mr Osborne has rejected Labour's calls for a "Plan B" for the UK economy but Business Secretary Vince Cable has suggested there should be a "Plan A plus", with new measures to encourage growth.

'Economic stagnation'

Shadow chancellor Ed Balls has said the lack of growth and "credible" growth plans is undermining confidence and causing market turbulence, and has accused Mr Osborne of showing a lack of leadership in the global economic debate.

He argues that the chancellor's deficit reduction plans are driven by a political timetable "rather than sensible economics".

Labour's London mayoral candidate Ken Livingstone has said there is a link between "economic stagnation" and the riots in north London over the weekend.

"As when Margaret Thatcher imposed such policies during her recessions, this creates the threat of people losing control, acting in completely unacceptable ways that threaten everyone, and culminating in events of the type we saw in Tottenham," he said.

Conservative peer Lord Harris, founder of the Carpet Right chain, saw the company's Tottenham store destroyed during Saturday night's riots.

He told BBC Radio 4's World at One that youth unemployment was a significant problem in the area.

Asked whether he thought the government was addressing the issue, he said: "Well, I hope they are going to try and after this I hope they are going to try to do more work to help the young people of this country...

"If we could get the economy moving there would be more jobs available."

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