TORY leader David Cameron has told business leaders in Manchester that he found the Pre-Budget Report `shocking, unconvincing and depressing'.

Mr Cameron, speaking at a Greater Manchester Chamber of Commerce dinner at the city's Midland Hotel last night (Monday), said he found the level of government borrowing after 14 years of economic growth shocking.

"This year it's £78bn, next year it will be £118bn - a record level of borrowing. A year after that it will be £105bn. We are going to double the national debt in five years.

The interest on the debt is going to be the fastest-growing part of public sector spending, more than on education, policing, the NHS."

Mr Cameron said he was unconvinced that the reduction in VAT would trigger more high street spending.

The depressing aspect of the Pre-Budget Report was, he said, the highly political nature of the measures. With VAT coming down for a year but rises in income tax for high earners and increased National Insurance contributions looming in 2011, the Conservative leader said the PBR `marched to a political timetable rather than an economic one'.

Depressing

Future tax rises would `act like a drag anchor' to the country's economic recovery. They signalled the end of having tax rates to encourage enterprise, entrepreneurship and effort.

The lack of available credit was the biggest hurdle faced by businesses, and more effective measures would have been a six-month VAT holiday, National Insurance reductions for small firms and tax breaks for companies which give jobs to unemployed people.

Mr Darling today defended his £1trillion gamble to drag Britain out of recession, insisting that he was doing the `right thing' to support the economy.

Mr Darling said it would have been wrong to walk away and leave people to `sink or swim', as he faced questioning over yesterday's Pre-Budget Report, which is designed to kick-start the struggling economy with a £20bn boost.

"It seems only the Conservatives who are saying - as they did in the 1980s and the 1990s - `Just walk away from people, leave them high and dry, let them sink or swim'," he told GMTV.

"I just do not think that is the right thing to do. People expect the government to help them. We will be helping people, and I fully intend to see that through."

"Of course, we have got to live within our means, so I have also had to take difficult decisions, though I think it is the fair way to do it, to ensure we get that borrowing back down again," he said.

"People (who earn) over £100,000 will actually be paying more - I make no bones about that, in three years' time, when the changes come through.

"But I believe that it is the right thing to do, to support our economy now but at the same time make sure that as a country, we live within our means."

Governor of the Bank of England Mervyn King today backed the Pre-Budget Report, saying the measures seemed ‘perfectly reasonable’ given the ‘extraordinary circumstances’. But he warned there was a ‘long hard road ahead’.

Business leaders split on Pre-Budget Report

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