7:52PM GMT 28 Feb 2015
353 Comments
Britain will become stuck in a low growth trap unless policymakers tackle the country's "unsustainable deficit and debt" and get public spending under control, former Chancellor Ken Clarke has warned.
The Tory grandee said that deviating from Conservative plans to reduce public spending after May's general election would be disastrous for Britain's long-term growth prospects.
"I'm entirely signed up to what's on offer after the election," he told The Telegraph on a trade mission to Colombia. "It's not a complete solution, but unless you have fiscal discipline, and unless you get rid of a problem of an unsustainable deficit and debt burden, then you're not going to able to get growth.
"If you saddle the [economy] with debt ... then you're wasting your time trying to deliver the growth that we wish to achieve."
Using the examples of Greece and France, where government spending accounted for 59.2pc and 57.1pc of gross domestic product (GDP) respectively in 2013, compared with the UK's 45.5pc, according to Eurostat, Mr Clarke said spending above 40pc of GDP was not sustainable.
"A properly run and organised [economy] should cope perfectly well spending between 35pc and 40pc of GDP. Going above that is the result of problems across the western world, including the UK.
"The idea that you can go around trying to win votes by hiring more public sector workers to keep up job creation out of the public purse is just repeating the folly of [former Labour prime minister] Gordon Brown."
Official figures showed Britain posted its biggest budget surplus since before the financial crisis in January.
However, the Government will borrow around £90bn this financial year to bridge the gap between the Treasury's tax take and public services spending.
Britain's total debt pile now stands at £1.46 trillion, or 79.6pc of GDP.
George Osborne, the Chancellor, has outlined plans to post a budget surplus of £23bn in 2019-20 by slashing public spending.
The Office for Budget Responsibility (OBR), the Government's fiscal watchdog, has calculated that the size of the state will fall to 35.2pc of GDP by 2020 under current plans, or its lowest proportion in 80 years.
Mr Clarke, who led last week's trade mission, said building relationships with economies such as Colombia was vital for driving growth.
"There are huge opportunities for both Colombian business in the UK and UK businesses in Colombia," he said.
Mr Clarke said the country had overcome many of its security issues during the past two decades.
"This is not some sort of south American wild west where a few British people exist. It could not be further away from that. It is one of the most successful emerging market big countries."
The former Chancellor also said a weaker pound was not the way to make Britain more competitive.
"Britain has been smothered by this nonsense in recent years that as long as you retain the right to trash our currency you don't have a problem. What you have to do is keep a strong, stable currency by having sensible economic policies," he said.
"You do that by making yourself competitive and giving the support to our exporters, like the Germans and Americans give to theirs."
He also warned of an endless cycle of Greek bail-outs unless Greeceenacted reforms.
"Why should the British [via the International Monetary Fund], the French, the Germans, give more money to the Greeks to enable them to do silly left wing populist things?
"They've got to sign up to reforms and they need to do more. Greece will never be a prosperous country again unless it tackles these things."
