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Government supports infrastructure spending

Deputy Prime Minister Nick Clegg is to promise an increase in the speed of infrastructure development in an attempt to revive flagging economic growth in a speech at the London School of Economics today.

Some have characterised the focus on infrastructure spending as the Coalition’s ‘Plan A+’ for the economy – a reference to the repeated calls from critics for a ‘Plan B’, which would see a slowdown in the pace of deficit reduction and public spending cuts.

The Government is investing in 40 major infrastructure projects, including new broadband for rural areas, new rail links and an improvement to the national grid. Although no new money is being made available, and spending cannot be brought forward from future years’ budgets, the Government does want to ensure that departments act urgently to get these schemes moving.

Clegg will argue that this investment will boost economic growth and lay the foundations for long-term improvements to the economy. He warned against “stockpiling capital that can be put to good use today”, highlighting the need to push these priority projects through.

Clegg will say: “Our critics say that all this government is capable of is cuts. That, beyond lowering a few business taxes, reducing a bit of red tape, there is little else we are willing or able to do. That is absolutely wrong.

“We can do more, we are doing more, we will do more. Better broadband so small, high-tech companies can flourish, renewable energy so low-carbon industry can too.

“If you modernise this kind of infrastructure you stimulate economic activity in the shorter term. But you also build the systems that high growth industries can use for years to come.”

Clegg will acknowledge that the economy is still stalling and that the situation has changed ‘dramatically’ within the last six months. Inflation has increased from 4.4% in July to 4.5% in August, and unemployment has risen again.

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