(Bloomberg) -- Boris Johnson’s Conservative Party is proposing to spend an extra one pound for every six pledged by Jeremy Corbyn’s Labour opposition, opening up big divisions over fiscal policy ahead of the Dec. 12 general election.
The Conservative manifesto published Sunday offered British voters few giveaways, portraying the governing party as a steady hand on the public finances as it ends a decade of austerity and accusing Labour of making profligate spending pledges that would drive up taxes and debt.
The Conservatives plan to increase day-to day-spending by just 3 billion pounds ($3.9 billion) a year by the end of the next parliament in 2024 and add 20 billion pounds to capital investment.
Labour, by contrast, is proposing an 83 billion-pound boost for public services and 55 billion pounds more for investment. Excluding the years of the financial crisis, the 138 billion-pound increase would see spending rise at the fastest pace since the 1960s.
Under both proposals, borrowing would only be needed for investment, with Labour saying low interest rates mean now is the time to be spending on increasing the productive potential of the economy.
“Austerity will end, whoever wins this election,” said Torsten Bell, chief executive of the Resolution Foundation think tank. “However, the country still faces a very big choice on the size of the state it wants.”
Johnson is hoping his safety-first policy package, with extra money for the National Health Service and modest tax cuts for workers, will consolidate his lead in the opinion polls in the final weeks of the campaign.
His proposals would leave total spending at around 41% of GDP, similar to that in Spain, while Corbyn envisages German levels of spending at around 45%. A further 12 billion pounds would be added to Labour’s spending plans if Corbyn honored a pledge to compensate women born in the 1950s who lost out as a result of changes to the state pension age.
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