Cameron continues to defend “necessary” spending cuts
At the World Economic Forum in Davos, Switzerland, British Prime Minister David Cameron is expected to say later today that the UK economy is making “progress”.
His speech will come just days after official figures revealed the UK economy contracted by 0.5% in the October to December period.
The figures shocked economists who had expected growth of 0.5% following growth of 0.7% in the third quarter and 1.1% in the April to June period.
The figures raised fears of a double dip recession since growth is expected to slow even further in the first half of 2011 as the spending cuts and the recent VAT hike add to pressures on the economy.
However, the PM continues to defend his Government’s spending cuts – designed to bring down the budget deficit.
At the time the cuts were announced, they received mixed responses; many were critical of them warning that slashing the deficit too quickly could pose a threat to economic recovery and push the UK back into a recession.
However, the spending cuts will undoubtedly hamper growth this year but Mr Cameron argues that they are necessary in order to tackle the budget deficit.
He said his Government will not be “blown off course” by one quarter’s “disappointing” economic growth figures.
In a speech to business leaders and politicians at the Forum, 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.”
Meanwhile, on the recovery, he is expected to say: “To get there isn’t easy. We can’t just flick on the switch of Government spending or pump the bubble back up. ”
Chancellor George Osborne will also deliver a speech at the Forum today.