Ministers mull £5bn economy boost

20 September 2011 Last updated at 13:58 ET

Ministers are discussing how to inject £5bn into the economy without abandoning their deficit reduction strategy, the BBC understands.

Some Cabinet members believe Chancellor George Osborne could raise capital spending on infrastructure, Political Editor Nick Robinson said.

The government has faced calls for a “Plan B” on the economy amid flagging growth and rising unemployment.

The Treasury has said any change in strategy would risk its credibility.

The news emerged as the International Monetary Fund said world leaders must take strong action to prevent the risk of a double-dip recession.

The BBC understands a debate is underway at the top of government about what more can be done to boost economic growth without being seen to back away from the coalition’s tough deficit reduction target – which Mr Osborne has called the UK’s “rock of stability”.

Some ministers believe up to £5bn in extra capital spending, on top of what was announced in March’s Budget, could be channelled towards the nation’s roads, rail and broadband.

The government has already promised to speed up major public works projects and publish an infrastructure plan by the end of the year – but business groups have urged them to go further.

The government has always rejected Labour’s calls for an economic “Plan B”.

But Nick Robinson said ministers believed the £5bn capital boost would not represent a U-turn since the Treasury’s fiscal targets are based around current spending rather than capital expenditure.

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