Cameron Budget would focus on growth

Tory leader prepares to signal a break from his ‘age of austerity’ rhetoric

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David Cameron will on Monday signal a break from his “age of austerity” rhetoric, by telling a business audience that the first Budget of an incoming Conservative government would “go for growth”.

The Tory leader will promise to hold an “emergency Budget” within 50 days of the election, insisting that it would simultaneously map out a path for cutting the deficit while providing incentives for growth.

Alistair Darling, chancellor, claimed that Mr Cameron was being “two-faced” and that the Tories were planning a harsh Budget in the early summer of 2010 that would “choke off the recovery”.

Labour believes that Mr Cameron has misjudged the political and economic mood with his foreboding rhetoric about the budget deficit and that he has been forced to take a different tack because of deteriorating opinion polls.

An Ipsos Mori survey for the Observer put the Conservatives at 37 points, only six ahead of Labour at 31 with the Liberal Democrats at 17. It was the smallest gap between the two top parties since last December.

The poll also detected the highest level of economic optimism since 1997, with 46 per cent believing that the economy would perform better over the next year, compared with 23 per cent who think it will deteriorate.

The poll confirms the view among senior Tories that the next election is not in the bag. “We have always said there is a huge electoral mountain to climb,” said one Cameron aide.

For an outright majority, the Tories need to gain 117 seats. The Observer claimed that if its poll was repeated in a general election, they would fall 35 short of an overall majority.

Labour strategists claim that their private polling suggests that Mr Cameron’s “austerity Britain” message has lost its appeal in the past two months, hence the Tory leader’s more optimistic tone to today’s CBI annual conference.

Mr Cameron told the BBC’s Andrew Marr Show that a first Tory Budget should be about getting the deficit under control but added: “It should also be a Budget that goes for growth, that gets the economy moving again.”

He did not set out any new policies to achieve that objective, other than repeating a planned cut to corporation tax from 28p to 25p, funded by ending some allowances, and by scrapping national insurance contributions for start-up companies taking on new staff.

Mr Cameron will argue that tackling the deficit is an essential part of restoring confidence, but Gordon Brown, prime minister, will tell the same business audience that the Tory plan risked “turning off the life support” by withdrawing the fiscal stimulus too quickly.

The Tory leader’s new emphasis on growth follows Mr Brown’s own “go for growth” call in last week’s Queen’s Speech debate and similar rhetoric by Angela Merkel, German chancellor, who is putting tax cuts ahead of early action to slash the deficit.

Mr Brown will tell the CBI that the European Union had to be an important part of Britain’s growth strategy, promising to publish shortly a paper setting out proposals for the incoming Spanish presidency of the EU.

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