Brown: "Stability and recovery"

Plan to Reduce Budget Deficit

In his first Budget speech, Gordon Brown said the Government would only borrow to invest and public debt would be held at a prudent and stable level.

"We will now establish clear rules, a new discipline, openness and accountability," he said. "My first rule, the golden rule, ensures that over the economic cycle the Government will borrow only to invest and that current spending will be met from taxation."

"My second rule is that, as a proportion of national income, public debt will be held at a prudent and stable level over the economic cycle," he added.

In order to do this, the Chancellor said he would be implementing a five year deficit reduction plan.

At the moment the Government is spending more in debt interest payments than on schools. Fiscal policy would be tightened by £5.5 billion this year and £4.75 billion next year.

Mr Brown told a packed Commons that Britain faced four weakness: instability, under investment, unemployment and waste of talent.

He said his budget was a blueprint for recovery and long-term stability. He insisted that without stability the economy would flounder and not attract investment.