Clegg said that the government’s “absolute priority” was to use its balance sheet to inject credit into the economy and it would do this by “massively amplifying the principle of what we did on credit easing,” a reference to the Treasury’s £20bn scheme to support lending to small businesses.
The comments came as the International Monetary Fund called on the British government and the Bank of England to work together to boost demand.
Clegg however denied the new focus on growth was a plan B, insisting the coalition’s deficit reduction plan had earned Britain market credibility.
Christine Lagarde, managing director at the IMF, backed the new approach on a visit to London.
Presenting the IMF’s annual report on the UK economy, she said: “Growth is too slow and unemployment, including youth unemployment, is too high. Policies to bolster demand before low growth becomes entrenched are needed.”
