Cameron defensive amid economic gloom
By Ian Dunt
David Cameron was forced to defend his economic policy today, after a week saw the UK economy contract.
The pressure on the government intensified significantly after official figures showed a contraction in the economy.
The figures came a day after the outgoing head of the CBI, which is sympathetic to government policy, launched a withering attack on the coalition’s lack of plans for growth in the economy.
The criticism echoed that of Labour, which claims the government is cutting spending without having any plans to substitute it with demand in the private sector.
“This week, we had disappointing growth estimates back home,” Mr Cameron admitted at a speech delivered to the World Economic Forum in Davos.
“Yes, they were partly driven by the terrible weather which shut down airports, factories and schools – but let’s be frank.
“They also brought home something we have said for months: given the traumas of recent years, the recovery was always going to be choppy.”
“Those who argue that dealing with our deficit and promoting growth are somehow alternatives are wrong,” Mr Cameron continued.
“You cannot put off the first in order to promote the second.
He added: “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.”
The speech comes as the GfK NOP Consumer Confidence index dropped to eight points this month to -29, the lowest level for 12 months.
Nick Moon, managing director of GfK NOP Social Research, commented: “January’s eight point drop represents an astonishing collapse in consumer confidence.
“In the 35 years since the ondex began, confidence has only slumped this much in a single month on six occasions, the last being November to December 1994.”
Angela Eagle, Labour’s shadow chief secretary to the Treasury, said: “These are very concerning figures which give us an early sign of the impact of this month’s VAT rise.
“David Cameron and George Osborne complacently boasted last month that the economy was recovering and Britain was out of the danger zone. But in the real world it’s becoming increasingly clear that the Conservative-led Government is making the wrong choices on the economy.
“Cutting too deep, too fast is not the best way to get the deficit down, and it is simply not credible to insist that there is no alternative.”
