Cameron sticking to ‘tough’ plan

David Cameron argues that creating growth in the UK economy will not be easy

David Cameron is expected to say the economy is making “progress”, despite figures showing it shrank during the final quarter of last year.

The prime minister will argue that the challenges facing the UK are “not easy” to overcome but the budget deficit must be tackled through spending cuts.

In a speech, he will say coalition policies have allowed the country to keep its international credit rating.

The government set out its plans to cut spending last autumn.

Figures released this week showed the UK economy had contracted by 0.5% in the last three years of 2010.

This has led critics to question whether the government’s deficit-tackling programme was having a negative effect on growth.

Others argue that savings in areas like education, defence and council budgets are unnecessary and will damage many people’s lives, through redundancies and poorer public services.

In a speech to business leaders and politicians at the World Economic Forum in Davos, Mr Cameron will say: “Those who argue that dealing with our deficit and promoting growth are somehow alternatives are wrong. You cannot put off the first in order to promote the second.

“Average government debt in the EU is almost 80% of GDP. Some countries are again borrowing 5, 6 or 7% of GDP again this year. The figure for the UK is more than 10%. This is clearly unsustainable and action cannot be put off.”

Moving on to economic recovery, Mr Cameron will say: “To get there isn’t easy. We can’t just flick on the switch of government spending or pump the bubble back up. Making this transformation – and it is a transformation – requires painstaking work and it takes time…

“The scale of the task is immense, so we need to be bold in order to build this economy of the future. The British people know these things. They understand there are no short-cuts to a better future.

“And already we’re making progress. Not long ago we were heading towards the danger zone where markets start to question your credibility.

“Yet in the past eight months we’ve seen our credit rating – which was on the brink of being downgraded – affirmed at the triple-A level. We’ve seen market interest rates – which were in danger of spiralling – actually fall.

“All this has happened not in spite of our plan to cut the deficit, but because of it. That’s why we must stick to the course we have set out.”

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