Deputy Prime Minister Nick Clegg has appeared to admit that the coalition cut spending too deeply when it took power.
Speaking ahead of the release of figures that are expected to show a fresh contraction in the UK economy, he said ministers had “comforted” themselves at the time that the reduction was in line with plans drawn up by the previous Chancellor, Labour’s Alistair Darling.
In an interview with The House magazine, he said: “If I’m going to be sort of self-critical, there was this reduction in capital spending when we came into the Coalition Government.
“I think we comforted ourselves at the time that it was actually no more than what Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop off in capital investment.
“But I think we’ve all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible.”
Rachel Reeves, shadow chief secretary to the Treasury, said: “This is the first admission that this Government has made serious mistakes on the economy.”
Some experts believe gross domestic product (GDP) – released later today – will have fallen by 0.1% in the final quarter of 2012.
If the economy then contracts in the current quarter the nation would be officially back in recession.
Hopes of a rebound are fading after a snow-hit start to 2013, which some estimate cost Britain more than £500m-a-day in lost output.
A fourth-quarter downturn would be a sharp reversal of the 0.9% recovery seen in the third quarter, when output was fuelled by one-off factors such as the Olympics and as the economy clawed back activity lost during the Queen’s Diamond Jubilee holiday.
Bank of England governor Sir Mervyn King has already warned that the quarter would be “considerably weaker”, while the IMF believes the UK contracted by 0.2% overall in 2012.
It also expects expansion of just 1% during this year.
Today’s figures from the Office for National Statistics (ONS) represent the initial estimate of GDP and are subject to revision over subsequent months.
But the run of gloomy economic indicators increases the threat to the UK’s prized AAA rating, with all three major ratings agencies placing the country on negative outlook.
Construction has so far been the only bright spot, according to recent industry surveys, with activity surging to a 15-month high in December.
But it accounts for only 10% of the economy and the far bigger services sector has not fared so well.
The first official estimate of fourth-quarter GDP will not include overall household consumer spending figures, which will be taken into account in the second estimate.
Nick Clegg Suggests Coalition Cut Too Deeply – Sky News
Top Stories – Google News