Gillard: Budget cuts won’t send economy into recession

Prime Minister Julia Gillard says cutting spending in the May budget to reach a promised 2012-13 surplus will not risk sending the economy into recession.

“To be talking in that language is to completely misunderstand what’s happening in the Australian economy today,” Gillard told Network Ten yesterday.

Gillard said returning the Australian government’s budget to surplus was an economic imperative.

“The best way we can lock in confidence about the future and send a message to the world about the Australian economy is to deliver a budget surplus,” she said.

Gillard did not speculate on details of the spending cut.

“I know it’s budget speculation season – it’s kind of started early this year – and I’m not going to engage in speculation about individual items,” she said.

“As we return the budget to surplus – which is the right economic decision now, to lock in confidence for the future – we’ll be taking our Labor values with us.”