Brown and Cameron clash on debt

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Gordon Brown and David Cameron have clashed over the level of Britain's personal and public debt.

Speaking at prime minister's questions in the Commons on Wednesday, the Conservative leader accused the government of leading the UK into a longer recession than other major economies because of the extent of borrowing.

However the prime minister insisted that combined debt was lower than in comparable countries and government borrowing smaller as a share of GDP than in 1997.

Cameron opened the rowdy exchange by noting that: "This week the European Commission said that Britain is facing a deeper recession next year than the United States, than Japan or than any major EU economy.

"The prime minister kept telling us that Britain was better prepared to face the recession, in fact we are the worst prepared. Why was he wrong?" he asked.

Prepared

Brown told him that: "The reasons why we are better prepared than other countries is that for years we have had low interest rates, we are now getting inflation down and it will come down in the next year, we have high levels of employment, higher than almost every other major industrial country, and we can come through this.

"At the same time, corporate balance sheets are strong, outside the financial sector," he added.

But Cameron came back that: "If we are better prepared, why is our recession forecast to be deeper?

The prime minister replied that it was because the economy had benefited from "10 years of economic growth, 10 years of stability, [and] 10 years where three million jobs have been created."

He added that several EU economies had been in negative growth in the second quarter of this year, whereas Britain was not.

Personal debt

The Tory leader then asked whether: "One of the reasons why our recession is predicted to be deeper is that we have got such high levels of personal debt?"

Cameron claimed the UK has the "highest level of household debt of any major economy".

He also quoted Brown as saying in 1995 that "you can't build a new Jerusalem on a mountain of debt".

But Brown insisted that "you have got to look at personal and public debt together".

On this measure he said that Britain has lower debt than France, Germany, Italy and Japan.

Cameron argued that as well as high household debt, Britain suffers from "one of the highest budget deficits in the world and our regulation system has failed".

He claimed that the Treasury minister Lord Myners had said that he wants to see a "public inquiry into the regulatory failure".

Brown maintained that the "financial secretary said no such thing" and that Britain has "low national public debt", reduced from that inherited from the Conservatives in 1997 to 38 per cent this year.