Clegg warns that economic situation is deteriorating

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Nick Clegg: "There are levers we can pull to stimulate growth"

Nick Clegg has issued a warning about the state of the global economy and vowed to do more to boost UK growth.

The deputy prime minister said there was "little margin for error" but denied the government is helpless in the face of the worsening outlook.
In a speech in London, he said 40 major infrastructure projects, such as Crossrail and new broadband networks, are to be given "priority status".
Labour have urged ministers to change course and scale back spending cuts.
But Mr Clegg insisted there would be "no deviation" from the coalition's deficit reduction plan.
'Jobs needed' Shortly before Mr Clegg's speech to the London School of Economics, figures showed unemployment rose by a further 80,000 to 2.51 million in the three months to the end of July.
The Lib Dem leader said "the country needs jobs and time is no longer on our side".
Severe external pressures, such the eurozone debt crisis, weak US growth and rising oil prices, had led to a "dramatic change" in the international situation in the past six months, he acknowledged.

Nick Clegg Deputy Prime Minister

Ministers were "not blind" to the deterioration in conditions and recognised the "economic context was much worse than before".

"So the reality we face is stark," he said.
"There is now little margin for error. But that does not mean we are helpless. It does not mean we intend to sit on our hands while the economy falters."
Delivering infrastructure projects as quickly as possible was one way the government could underpin stronger growth, he argued.
Ministers would intervene to prevent any hold-ups to 40 key projects, such as rolling out broadband, motorway improvements and upgrading the national grid, and "get the money out the door".
'Not just cuts' Chief Secretary to the Treasury Danny Alexander has spoken to top civil servants in every government department in recent days to ensure all available money earmarked for capital spending is being utilised and not being stockpiled.
However, Mr Clegg said the emphasis was on preventing "slippage" in projects rather than bringing forward work.
Mr Clegg stressed: "Our critics say that all this government is capable of is cuts. That, beyond lowering a few business taxes, reducing a bit of red tape, there is little else we are willing or able to do. That is absolutely wrong.
"We can do more, we are doing more, we will do more."
The BBC News Channel's Chief Political Correspondent Norman Smith said the speech represented the most pessimistic analysis of the economy's prospects by a senior minister for some time.
Labour have accused ministers of concentrating solely on cutting spending and having no strategy for increasing output, a crucial component if their deficit reduction targets are to be met.
The opposition says the current approach is not working and that a "Plan B" - slowing the pace of cuts, spending money in key areas such as housebuilding and reducing VAT - is needed.
Mr Clegg said there was some flexibility built into the coalition's economic strategy but that Labour's plan would lead to "soaring interest rates and crashing credibility".
The most recent official figures showed that UK economic growth slowed to 0.2% in April to July and Chancellor George Osborne is widely expected to downgrade forecasts for 2011 later this year.
Cabinet Office minister Francis Maude told the BBC on Wednesday that the government "needed to press on with the infrastructure projects which enable the economy to grow for the future".