Sir Richard Branson backs Conservatives over deficit plans

Wednesday 17th February 2010

Sir Richard Branson has added his voice to a chorus of critiques of the government's handling of the deficit by claiming it poses a "serious" risk to Britain's economic recovery.

In an interview with the Evening Standard, the Virgin boss claimed that urgent action is needed to address the record £178 billion deficit or the government risks losing the confidence of financial markets.

"I believe the UK's record budget deficit does pose a serious risk to our recovery," he said.

"It would be damaging if we lost the confidence of the markets through delayed action, and saw interest rates have to go up steeply."

Prime minister Gordon Brown has said the economy remains too fragile to cut spending and said deficit reduction could only begin in 2011.

The Conservatives, in contrast, have pledged to hold an emergency budget within the first 50 days of taking office, if elected.

On Sunday, 20 leading economists, including former Bank of England policymakers, called on the government to begin cutting the UK's record deficit immediately after the upcoming election, in contrast to the prime minister's plans to delay cuts to public spending.

"In the absence of a credible plan, there is a risk that a loss of confidence in the UK's economic policy framework will contribute to higher long-term interest rates and/or currency instability, which could undermine the recovery," they said.

"In order to minimise this risk and support a sustainable recovery, the next government should set out a detailed plan to reduce the structural budget deficit more quickly than set out in the 2009 pre-budget report."

They said most fiscal consolidation should take the form of reductions in government spending, and suggested these changes take effect in the next fiscal year.

In a Sky News interview following the publication of the economists' letter, shadow chancellor George Osborne claimed the party's policies were "now part of the mainstream economic consensus".

With the leading parties in disagreement over the speed and scope of cuts needed, the UK economy has become a fault line in the current election campaign.

Official figures revealed last month that the UK had limped out of recession in the last quarter of 2009 with 0.1 per cent growth.

At the time, chancellor Alistair Darling said he was certain the country was now "on a path to recovery".

"I'm confident but I'll always remain cautious," he said.

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