Chris Huhne says governments should not speculate about the global economy outside of a Budget
Public sector cuts could be scaled back if economic conditions deteriorate, the energy secretary has said.
Lib Dem minister Chris Huhne told the Daily Telegraph the spending reductions due to be outlined on 20 October were not “lashed to the mast”.
He added that deep cuts may also become less urgent if the economy performed better than expected.
Meanwhile, Chancellor George Osborne has stressed that the coalition’s cuts will be phased in over four years.
Their comments come amid concern from some economists that the UK is still susceptible to a return to recession and that the £83bn cuts programme, due to be detailed in the comprehensive spending review, could worsen matters.
BBC political correspondent Mike Sergeant said the message from the prime minister and the chancellor so far had been that the planned cuts were unavoidable, but there now appeared to be a slight softening of the harsh language ahead of the spending review.
“George Osborne is emphasising the fact that spending reductions will be staggered over four years. The full pain won’t all be felt at once,” our correspondent says.
“Chris Huhne – himself an economist – seems to be even more flexible. Mr Huhne’s argument is that if the economy performs better, cutting spending could be less urgent. If things deteriorate, deep cuts could be economically dangerous.”
Mr Huhne said Mr Osborne’s emergency budget, which indicated a shift in fiscal policy away from the former Labour government’s, had been “absolutely right”.
But Mr Huhne also argued that the figures could be amended if global conditions deteriorated.
“I’ve never known one Treasury red book to be exactly like the last one. There is always a change,” he said.
“It is a bit like setting sail. If the wind changes, you have to tack about to get to [your destination].
“Global growth could be either higher or lower. We just don’t know, and it’s not sensible, outside the Budget period, for governments to make speculations about what is going to happen.
“The right time to look at that Budget judgement is when we come up to the Budget in the spring. The key thing then is to look at things in the round and remember the overall objective is to stabilise and begin to reduce the public debt to GDP ratio.”
He said he believed a return to recession – known as a double-dip – was “not impossible”, although he did not consider it “likely”.
Mr Osborne, who was in Washington on Friday for the annual meetings of the International Monetary Fund and World Bank, had stressed that the government was “trying to sustain a steady and sustainable recovery”, the Financial Times reported.
He said: “We are talking about a staggered plan that takes place over four years and does not take place overnight.”
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