Following Lib Dem leader Nick Clegg's TV debate success his popularity has soared in the opinion polls suggesting that the Liberal Democrats could be a real contender for government at the May 6 election.
But what is the substance behind claims that his manifesto plans pose a threat to the UK economy, at a time when the banking and finance sector is already in tatters?
The party’s manifesto has outlined substantial tax hikes for the wealthy to fund tax cuts for lower earners but central to Clegg’s plans for the economy is a proposal to break up the banks, particlularly those partly owned by the state like RBS. He says they will ‘devolve and disperse economic power, particularly in the banking sector’.
Speaking to Money Marketing Informed Choice managing director Martin Bamford has urged caution to voters: “The problem is the LibDems are coming across as sound and logical because of the state of the economy, but if you look at the longer-term implications they could be very dangerous if they wielded too much power in the next parliament,” he said.
Experts also believe that their plans for ‘Robin Hood’ economic policies of heavily taxing the wealthy to put more money in the pockets of lower earners will encourage the rich to invest offshore in tax havens, taking a vital chunk of capital out of the UK economy.
Some commentators have also said that plans to limit tax relief on pensions at the basic rate will be ‘detrimental’.
In his manifesto plans Liberal Democrat Leader Nick Clegg said: “We will create a totally different financial system; a completely different ecology of banking. More mutuals; a Post Office Bank; credit unions; Regional Stock Exchanges; Local Enterprise Funds to attract venture capital into small businesses.
“And for the banks: fundamental change. We will break them up and break them down. To re-root our banks in the communities they serve by making them, quite simply, smaller.
“And to protect people’s everyday savings from being used to fuel the casino culture of the global financial industry by separating retail and investment banking for good.
“Under the Liberal Democrats, the financial infrastructure of Britain will be different.”
And fears for the economy are still growing with more and more speculation that Britain could be wake up to a hung parliament on May 7. Many believe a period of uncertainty would be detrimental to economic recovery and even if the Liberal Democrats don’t win a majority vote they could hold a significant influence in a coalition government.
© Fair Investment Company Ltd