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Liberal Democrat Conference: Economy: Pleas for tax rises to aid cut in rates

Colin Brown Chief Political Correspondent
Monday 21 September 1998 18:02 EDT
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BUSINESS LEADERS havestepped up demands for a cut in interest rates and a devaluation of the pound, to prevent a recession.

"Six months ago, it was just the manufacturing sector saying that the high interest rate and the strong pound were causing pain. It is now becoming increasingly clear that there is a slowdown across the board," Sir Clive Thompson, president of the Confederation of British Industry, told a conference fringe meeting.

Sir Clive argued that interest rates could be cut in spite of the turmoil in markets in Asia, Russia and Latin America.

In today's debate on the economy, Liberal Democratsare expected to argue, as some union leaders did last week, that tax increases could have been used by the Chancellor, Gordon Brown, to damp down demand to allow interest rates to be cut.

The party's motion calls for action to allow the introduction of the single European currency; increases in VAT thresholds for small and medium firms; and a "fairer" tax system phasing out tax reliefs and imposing more taxes on pollution.

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