Theresa May defends public sector pay cap under pressure from Labour

Theresa May raised the spectre of a Greek-style economic collapse if Britain fails to press ahead with tackling the deficit on Wednesday, as she was challenged repeatedly by Jeremy Corbyn over the public sector pay cap.

With intense political pressure on the prime minister – including from her own cabinet colleagues – to ease the strain for cash-strapped public servants, including nurses and teachers, she warned MPs about the risks of loosening the purse strings.

“This is not a theoretical issue. Let us look at those countries that failed to deal with it. In Greece, where they have not dealt with the deficit … What did we see with that failure to deal with the deficit? Spending on the health service cut by 36%. That does not help nurses or patients,” she said.

Comparisons with Greece were repeatedly used by George Osborne in 2010 to justify public spending cuts, as riots erupted on the streets of Athens over the stringent bailout conditions imposed by the International Monetary Fund and the eurozone.

But the analogy represented a significant ratcheting up of the pro-austerity argument from May.

A Conservative spokesman emphasised remarks afterwards, saying: “There are siren calls from Labour to abandon any kind of fiscal restraint whatsoever. What happens, we’ve seen as a case study, is what happened in Greece.” He added: “I think she was suggesting if Jeremy Corbyn’s Labour party got the chance to impose its fiscal policies on the United Kingdom that is a very real threat.”

A spokesman for Corbyn described the claims as “preposterous”. “The situation in Greece is tied up with the eurozone and the management of the eurozone banks – we’re not remotely in that situation. Our manifesto and our pledges were costed, unlike the government’s,” he said.


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