Deputy Prime Minister Nick Clegg insists the economy recovery was on track, despite calls from the International Monetary Foundation’s chief economist and Boris Johnson to re-think austerity plans.
Speaking to the BBC he said the government was committed to find innovative ways of raising funds for capital investment – but he warned a return to the “bad old days” of extensive borrowing was not the answer.
He also heralded tomorrow’s announcement on HS2 as an example of how creative thinking can raise capital investment.
There have been an increasing number of calls for a new economic strategy to be unveiled by Chancellor George Osborne in March’s budget.
Figures published on Friday revealed a drop in GDP threatening an unprecedented triple dip recession.
Mr Clegg defended the government on BBC’s Andrew Marr programme. He said: “You can be very tough on the deficit, which we have, we have reduced it by a quarter, and you can be restlessly creative about how within those strictures you do things to make the economy grow.
“We’re being tough, but pragmatic. We are being resolute but innovative. If people have ideas about how we can provide further capital investment into our infrastructure, without breaking the bank, of course we are open to that.
“We are absolutely not going to change course in paying off one of the world’s largest budget deficits – why? Because if you just shrug your shoulders and say it’s too complicated, we end up asking our children and grandchildren to pay off this generation’s debts.”
Mr Clegg highlighted Crossrail as one of the largest infrastructure in Europe and said tomorrow announcements about HS2 would heal the north south divide.
Today’s statement was made just after it was revealed that the UK’s economy contracted by 0.3 per cent in the last quarter of 2012. The IMF is predicting the UK’s growth outlook to be just 1 per cent this year.
Read more: Triple-dip recession in the UK - the key questions
Shadow chancellor Ed Balls accused prime minister David Cameron and Mr Osborne of being “asleep at the wheel”.
Mr Balls also called for a change of strategy from the chancellor: “As the IMF has warned again this week, we need a change of course in the budget with policies to kick-start our flatlining economy.
“A plan B now should include a compulsory jobs guarantee for the long-term unemployed and a temporary VAT cut to boost family incomes and our struggling high streets