Clegg says investment in infrastructure holds the key to eliminating the deficit

Liberal Democrat leader Nick Clegg says that whilst spending on public services should only grow in line with the economy, borrowing to boost areas where national infrastructure is weak, like transport, can flout this rule.

Clegg, laying out his party's stance on clearing the deficit, speaking at Bloomberg news, said he would limit Government borrowing to the amount needed for essential investment, in an approach he claimed neither amounted to the "indiscriminate borrowing under Labour," nor the Conservative Party's preference for a shrinking state. "It's smart, it's new, it's distinctive and it combines responsibility with a commitment to investing in the kinds of things we need."

He said investment was needed both "to fix our creaking national infrastructure" and to spur the economic growth necessary to clearing the deficit. "We cannot build a stronger economy and a fairer society where there are opportunities for everyone unless we are prepared to put our shoulders to the wheel and use the muscle of the state - if necessary through borrowing - to re-wire and revamp our infrastructure."

Clegg, who could hold the balance of power if there is another hung parliament next year, said that the railway network was "a throwback to the 1970s" and we have "some of the most congested roads in Europe". His economic rule was interpreted as favouring transport over health and schools investment.