LONDON, Sept 13 (Reuters) - British treasury minister Paul Myners said on Sunday international bond markets were willing to continue their support, provided public finances were returned to sustainability once recovery was established.
Repeating the ruling Labour Party's line, Myners said public spending should not be stopped until recovery was in place despite government borrowing forecast to hit 175 billion pounds ($292 billion) in 2009-10, or more than 12 percent of GDP.
'We can afford to do it. It is quite evident from the fact that we are able to raise the money in international bond markets that the willingness to support us is there provided we do as the chancellor (Alistair Darling) said and get public finances back to a more sustainable position once the recovery is well-established,' he told Sky television.
In May, Standard & Poor's cut Britain's sovereign rating outlook to negative from stable, retaining its triple-A rating but saying there was a one in three chance of a downgrade.
In July, the head of Britain's debt management office said he saw healthy appetite for government debt in international markets.
Public spending is set to be a key electoral battleground in the next general election, which has to be held by June.
The Opposition Conservative leader David Cameron, whose party is ahead in opinion polls, said Britain's record level of borrowing during the recession meant the government was running the risk of defaulting on its debt.
Myners said the government was supporting the economy at a time of global crisis. 'We are keeping people in their jobs, we are keeping people in their houses, we are being sensitive to the needs of the community,' Myners said.
'That programme must not stop until the recovery is firmly rooted. This is where the Conservatives are being dangerous.'
A year on from the collapse of U.S. investment bank Lehman Brothers and the subsequent worldwide financial crisis and global recession, Myners said he thought the worst of the financial sector crisis was over.
'We now have a stable banking system, our banks are well capitalised, they are supporting the economy,' he said.
'As far as the economy is concerned, we continue to believe that towards the end of the year we will see that we've passed through the recession and economic growth is beginning to reappear.'
The minister said he was confident the government would see a profit on its investment in propping up British banks. 'A lot of capital has been put into the banks, but that is an investment,' he said.
'And that investment will prove to be very productive in due course. I am very confident that over time we will yield, achieve a surplus, on the investment we have made -- we will make a profit.
'We are already making a profit in respect of our investment in Royal Bank of Scotland, so we will see, but it will take time, we do not want to rush.' When asked if it would take a decade, he said: 'Oh, no, much less than that'.
The government was forced to step in a year ago and help prop up the British banking sector, spending 94 billion pounds supporting the Royal Bank of Scotland, HBOS and Lloyds TSB as well as nationalising Northern Rock and parts of Bradford & Bingley.
(Reporting by Avril Ormsby; Editing by Dan Lalor)
($1 = 0.5990 pound) Keywords: BRITAIN MYNERS (avril.ormsby@reuters.com ; +44 207 542 1816; Reuters Messaging: avril.ormsby.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Repeating the ruling Labour Party's line, Myners said public spending should not be stopped until recovery was in place despite government borrowing forecast to hit 175 billion pounds ($292 billion) in 2009-10, or more than 12 percent of GDP.
'We can afford to do it. It is quite evident from the fact that we are able to raise the money in international bond markets that the willingness to support us is there provided we do as the chancellor (Alistair Darling) said and get public finances back to a more sustainable position once the recovery is well-established,' he told Sky television.
In May, Standard & Poor's cut Britain's sovereign rating outlook to negative from stable, retaining its triple-A rating but saying there was a one in three chance of a downgrade.
In July, the head of Britain's debt management office said he saw healthy appetite for government debt in international markets.
Public spending is set to be a key electoral battleground in the next general election, which has to be held by June.
The Opposition Conservative leader David Cameron, whose party is ahead in opinion polls, said Britain's record level of borrowing during the recession meant the government was running the risk of defaulting on its debt.
Myners said the government was supporting the economy at a time of global crisis. 'We are keeping people in their jobs, we are keeping people in their houses, we are being sensitive to the needs of the community,' Myners said.
'That programme must not stop until the recovery is firmly rooted. This is where the Conservatives are being dangerous.'
A year on from the collapse of U.S. investment bank Lehman Brothers and the subsequent worldwide financial crisis and global recession, Myners said he thought the worst of the financial sector crisis was over.
'We now have a stable banking system, our banks are well capitalised, they are supporting the economy,' he said.
'As far as the economy is concerned, we continue to believe that towards the end of the year we will see that we've passed through the recession and economic growth is beginning to reappear.'
The minister said he was confident the government would see a profit on its investment in propping up British banks. 'A lot of capital has been put into the banks, but that is an investment,' he said.
'And that investment will prove to be very productive in due course. I am very confident that over time we will yield, achieve a surplus, on the investment we have made -- we will make a profit.
'We are already making a profit in respect of our investment in Royal Bank of Scotland, so we will see, but it will take time, we do not want to rush.' When asked if it would take a decade, he said: 'Oh, no, much less than that'.
The government was forced to step in a year ago and help prop up the British banking sector, spending 94 billion pounds supporting the Royal Bank of Scotland, HBOS and Lloyds TSB as well as nationalising Northern Rock and parts of Bradford & Bingley.
(Reporting by Avril Ormsby; Editing by Dan Lalor)
($1 = 0.5990 pound) Keywords: BRITAIN MYNERS (avril.ormsby@reuters.com ; +44 207 542 1816; Reuters Messaging: avril.ormsby.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.