Blair Backs Brown On Tax And Spending

by Robert Lee, Tax-News.com, London

05 February 2004

Prime Minister Tony Blair was seen to publicly back his embattled finance minister Gordon Brown on Tuesday, defending the Chancellor’s fiscal policies and rejecting claims that taxes will have to rise to meet the government’s spending commitments.

"If you look at it in real terms, our deficit is easily manageable and actually better than at most other points in downturns in the past," Mr Blair informed a committee of senior MPs.

The Chancellor’s spending and borrowing projections have been the subject of much debate since the pre-Budget report last December, and many economists have suggested that miscalculations and over-optimistic assumptions on economic growth will lead to the breaking of Brown's self-imposed ‘Golden Rule’, which is to match everyday expenditure with revenue over the course of the economic cycle.

However, when confronted with the argument that the government will have to break its election promise and raise income tax, the Prime Minister disagreed, telling the MPs: “I think the forward projections are pretty good. We've weathered the downturn better than most others."

Mr Blair added: “I think the Golden Rule will be met."

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