Treasury minister Liz Truss criticised over global financial crash claims
PUBLISHED: 11:19 16 July 2017 | UPDATED: 11:21 16 July 2017
Treasury minister Elizabeth Truss has been attacked over claims the former Labour government was to blame for the 2008 global financial crisis.
Writing in a national newspaper the chief secretary to the Treasury and South West Norfolk MP outlined the government’s approach to public spending and why austerity measures must remain.
But her attempt to pin the blame for the 2008 crash on the then Labour government was quickly dismissed on social media with many people pointing out the crisis began with subprime mortgages in the US.
Ms Truss wrote: “Labour government that spent money it didn’t have; half a million more people out of work; queues outside the banks; people leaving offices with cardboard boxes full of their possessions.”
She added: “The legacy of Labour’s Great Recession remains very real, with debt forecast to peak this year at almost 90pc of Gross Domestic Product ... [the] Office of Budget Responsibility’s report illustrates how uncontrolled spending can expose the public finances to further shocks.”
Many other people on social media highlighted that borrowing has gone up in the years since the Conservatives came to power in 2010.
Clarifying her points to this newspaper Ms Truss said: “The fact that the Labour government spent more money than they raised in taxes for years meant they were unprepared for the financial crisis. We should not make that mistake again.”
Norwich South Labour MP Clive Lewis said Ms Truss had seemingly not grasped the full reasons behind the crash which led to banks being bailed out and stock market prices across the globe plummeting.
“Every time a bank makes a loan new money is created,” he said. “The financial crisis happened because banks were able to create too much money, too quickly, and used it to push up house prices and speculate on financial markets.
“That was the cause of the 2008 crash. With ministers like this, no wonder the UK economy is in the state it’s in where since 2010 the Tories have borrowed more than every other Labour government since the Second World War. Yet we managed to invest in public services not cut them. This is the reality.”