Plans to repair the economy compared

By Stephen Coulter
BBC economics analyst

During the last three general elections, economic issues were not topping the agenda, because the UK was booming. The recession and ballooning government deficit have changed all that.

Clear dividing lines have now emerged between the main parties on the best ways of returning the economy to growth, taming the budget deficit, tackling the banking system and transforming the way the UK generates wealth.

With the economy still burdened by sky-high government and private debt, any recovery is likely to be tepid and protracted. How the main parties propose to deal with this will be at the centre of their budget proposals and election campaigns.

	Labour	Conservatives	Liberal Democrats
Boost the economy
Policies	Support Bank of England�s quantitative easing and low interest rates. Fiscal stimulus plans included cutting VAT and bringing forward infrastructure spending worth �20bn.	Oppose fiscal stimulus and would begin to cut spending earlier than Labour. Say the burden of reviving the economy should fall on monetary policy with low interest rates and a weak pound.	Broadly support the government�s fiscal stimulus, but oppose VAT cut. In favour of more infrastructure spending and greater support for the unemployed.
Problems	Quantitative easing may be inflationary and may not work. Fiscal stimulus increases borrowing, which may cause problems with repayments if interest rates rise.	Cutting spending early could strangle the recovery. Focus on monetary policy and currency ignores the lack of demand and relative weakness of exporters.	Increasing spending on infrastructure would mean deeper cuts in current spending on things like health and education.
Cut the deficit
Policies	New 50p income tax rate and national insurance rise. Cutting public spending by 8.6% of GDP over three years. Asset sales of �16bn. One year public sector wage freeze for top earners.	Cutting spending earlier and faster than Labour. Raising retirement age and abolishing various middle class tax breaks. Want an independent body to monitor the budget deficit.	Fiscal tightening of �112bn over 5 years. Detailed plans for cutting spending, including cutting the public sector pay bill, welfare entitlements and spending on IT and databases.
Problems	Some say the plan is too cautious. Fiscal tightening runs counter to monetary loosening (low interest rates). Asset sell-off criticised as wasteful and desperate.	Tories have only identified �7bn a year of savings by 2014 so far. Retention of 50p tax rate inconsistent with pledge to raise inheritance tax threshold to �1m.	Concern that cuts on this scale may damage the economy. Little detail on timing of the cuts. Uncertainty about previous spending pledges such as scrapping tuition fees.
Reform finance
Policies	Nationalised the most troubled banks and took big stakes in others. Deposit protection to reassure lenders. Special Liquidity Scheme to encourage banks to lend.	Want banks to lend more money to businesses instead of paying big staff bonuses. Would move regulation from Financial Services Authority to Bank of England.	Tighter capital requirements to stop banks over-extending themselves. Create �bad bank� to absorb toxic loans. In favour of having smaller banks and regional stock exchanges.
Problems	Bailing out the banks has swollen the national debt. The bail-out could encourage banks to take risks in future. Same regulatory structure is still in place.	Banks complain that restricting their bonuses will push business overseas. Unclear whether Bank of England wants responsibility for regulating banks.	Bad bank would saddle government with bad loans and their associated risks.
Boosting businesses
Policies	Labour�s industrial policy has focused on tax breaks for investment and research and development. Also temporary measures for key industries e.g. car scrappage scheme.	Cut red tape for business and abolish quangos. Lower taxes on companies and simplify tax system. Encourage private infrastructure spending. Boost vocational training.	Would minimise recession's impact on young people with more university places, apprenticeships and paid internships. Infrastructure spending and �Green Jobs Revolution�.
Problems	Critics say policies are designed for before recession. Subsidies for carmakers distort competition and may be hard to end.	Cutting regulation is a familiar pledge and would take a long time to deliver benefits. Tax simplification risks restricting revenue. Private sector may be unable to afford infrastructure projects.	The number of jobs in future green industries may not be large. Simply producing more graduates does not by itself create the jobs for them.