UK 'never on the brink of bankruptcy'
Thursday, 28 October 2010 12:00 AM
By politics.co.uk staff
The UK was never likely to fall into a crisis as severe as Greece's, the former Cabinet secretary has insisted.
The comments, from Lord Turnbull, challenge George Osborne's assertion that the spending review was needed so Britain could "step back from the brink".
Answering questions from Chuka Umunna, Ed Miliband's parliamentary private secretary, on the Treasury committee this morning, Lord Turnball argued Britain was never close to becoming bankrupt.
"Well I always thought that we were capable of producing a financial settlement that wouldn't take us into Irish and Greek problems," Lord Turnbull told the committee.
"A very large part of our debt was domestically held. If people are going to sell gilts they've got to buy something else. Who are these great shining examples of people who are issuing rock solid debt you want to buy?"
When pressed on whether he thought the UK was on the brink of bankruptcy, the peer replied: "No, I don't."
Speaking afterwards, Mr Umunna said: "No serious economist believes that the UK has been at the brink of bankruptcy or at risk from a Greek-style sovereign debt crisis, yet this is the basis for the government's entire economic policy and the deep and immediate cuts which the chancellor announced last week."
Justification of the measures announced in the emergency Budget and the spending review have revolved around a narrative that the European sovereign debt crisis put Britain in imminent economic danger.
Nick Clegg, when asked why the Liberal Democrats altered their economic policy immediately following the election, has consistently cited the sovereign debt crisis as the critical element that "shifted" his thinking.
George Osborne, in the spending review statement, claimed the cuts would bring Britain back from "the brink of bankruptcy".
Mr Umunna added: "The chancellor must stop rewriting history - it is irresponsible for someone whose words have the power to move markets to speak in such terms."
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