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Getting public spending down and halving borrowing in the four-year period was non-negotiable, U.K. Chancellor Alistair Darling said in an interview with the Financial Times on Tuesday.
"It was absolutely essential," the chancellor told the newspaper. If growth proves to be stronger than the current forecast, then the first priority has to be to get the structural borrowing down even further, he said.
In terms of public spending, there will be cuts to some programmes and some postponements, Darling noted. He said people should be in no doubt about the government's commitment.
"If we're going to get long-term growth, you've got to get borrowing down," the FT reported Darling as saying. But it has to be done in a sensible sort of way, he said. "I think on the public spending side, and I said it last weekend, that there will be toughest settlement for 20 years."
Spending review cannot be done now as there remains a lot of uncertainty, according to the chancellor. But public spending is set until April 2011. By the second half of 2010, he expects some of these uncertainties to diminish.
Darling told FT, "Interest rates look about as low as they can get." The Bank of England's key interest rate stands at a historical low of 0.5% and the central bank continues its GBP 200 billion quantitative easing measures.
Taking significant sums of money out of the economy at this stage will add risk to recovery, the chancellor warned. It would threaten to derail and it would be the wrong thing to do, said Darling.
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