But the York-born former business secretary, who stepped down as an MP in 2019, feels the approach must be different to pull the country out of the recession caused by coronavirus, with a longer term approach.
Speaking to The Yorkshire Post this week Sir Vince said ambitious and creative programmes would need to be launched to help the economy recover, and said he was “optimistic” about the future of his party as he felt new leadership for Labour would bolster voters to move away from the Tories.
As figures emerged which showed Britain's economy is set to plunge by 10.2 per cent in 2020, Sir Vince, 77, said: “Obviously there has to be some discipline over public spending, the Government can't just manufacture spending out of nothing. But what we should be avoiding is a sharp cut back, which drives us into deeper recession, creates a lot of misery and hardship on top of what already exists.”
He said the solution would be a “long-term plan” and compared the situation to the financial crash.
"Obviously there has to be some discipline over public spending, the Government can't just manufacture spending out of nothing," he said.
"But what we should be avoiding is a sharp cut back, which drives us into deeper recession and creates a lot of misery and hardship on top of what already exists.
"So there's got to be a long-term plan.
“[With] the financial crisis, I think Gordon Brown did the right thing, there was a very big expansion in the economy, pumping money in through the central bank and tax to create a very big budget deficit. That was the right thing to do.
“I then came in with the coalition which had to stabilise things subsequently and we had a plan which we inherited from Gordon Brown and Alistair Darling.
“They wanted to deal with the accumulated deficit over seven years and we tried to do it over five years, it finished up over seven years, and that also was the right thing to do.
“I think this time, we are going to have to take a much longer-term horizon to get the budget back to normal, partly because the crisis is much more serious.”
Sir Vince warned the economic crisis brought about by coronavirus would be “much bigger than it was 10 years ago” but also said “the whole world is in a slump, last time we had China and India and other countries pulling us out of recession.”
He said: “So I think we should take a relaxed view about the very large deficit in the budget, accept that spending has got to continue, maybe continuing the furlough scheme in a different way, together with tax cuts, things like national insurance on employers to be cut to encourage employment.”
He also said work creation schemes should be on the table, and added: “A lot of very imaginative and expensive things are going to have to happen. But the Government also needs a long term plan. It could be 20 years for getting the deficit and debt levels back to what would be regarded as sustainable comfortable levels.”
Sir Vince said it was his understanding that there was a battle inside Downing Street between the Prime Minister, who “wants to keep the economy going flat out, a lot more public spending” and the Chancellor who “is worried stiff about the budget, and is already preparing plans for a new round of cuts”.
But he said Boris Johnson faced issues with new MPs if he sided with Rishi Sunak, as “particularly in the North of England, the so-called Red Wall seats, they feel they will suffer real political damage if they don't deliver on those promises”.
Some of the cuts that had already been suggested would be palatable, Sir Vince said, such as scraping the triple lock on pensions.
He said: “I'm a pensioner and I've benefited like everybody else [who is] over pension age from the fact that we haven't had to take a cut in real terms after inflation in our pensions, we’ve done pretty well, we sailed through the last decade very comfortably, but that can't continue. It's very expensive, and the government is going to abandon that but there will be a lot of other unpleasant things as well if the Treasury get their way.”
And he hinted the policy he first proposed in 2009 - and which was adopted in 2015 by Ed Miliband - the so-called Mansion Tax could also be a way to bring in extra revenue.
Asked whether there was an appetite in the country for a rebalancing where those with more contribute more, Sir Vince said: “I think there should be, and there may be. But I'm a bit burnt by experience.”
He said: “It’s one thing to have a general belief that we should all pay a bit more tax to have better services or to create a fairer society, but when the Government actually comes up with something that hits your own pocket, people tend to scream in protest.”
For now, he said: “We've got to get the economy moving again, growing, generating more tax revenue, and when that happens, we can also think of restructuring the tax system to make it fair in the way that we've just been discussed.”
Speaking in the week where nominations opened for the next Liberal Democrat leader, Sir Vince said it would not be appropriate to back a candidate, but he said having Sir Keir Starmer at the helm of the Labour Party would help the Lib Dem’s case.
“Both [Ed Davey and Layla Moran would] be good leaders,” he said. “And I'm actually quite optimistic about the future.
“I take the view that the fact that the Labour Party is now coming to its senses under much better leadership is actually helpful for the Lib Dems as well, because I think what was happening in the last two elections, was the electorate was so frightened of Corbyn and the Labour Party coming back to power that they wouldn't vote for us either, particularly in the south of England, where we have the main challenges to the Tories.
“And if those factors are removed, and people are much more relaxed about a Labour Government coming back, I think actually the Lib Dems benefit from that. So the next leader, whoever it is, may have a rather easier job than I did.
He added: “We've had too long a Tory Government in my view.”