October 6, 2011 in Business

Debt crisis threat ‘serious’

Cameron will stick to austerity drive
David Stringer Associated Press
 

Cameron
(Full-size photo)

MANCHESTER, England – Europe’s deepening debt crisis poses a threat to the world economy as serious as the 2008 credit crunch, Britain’s prime minister said Wednesday.

In a somber speech at an annual convention of his Conservative Party, David Cameron vowed to stick to sharp austerity measures – despite the economy’s meager growth – and insisted Britain would not help fund “endless bailouts” of its tottering European neighbors.

“The threat to the world economy – and to Britain – is as serious today as it was in 2008 when world recession loomed,” Cameron told delegates in the northwest England city of Manchester.

“The eurozone is in crisis, the French and German economies have slowed to a standstill, even mighty America is being questioned about her debts,” he said.

Cameron made his keynote address after the government statistics agency said the country’s economy grew by a weaker than expected 0.1 percent in the second quarter, fueling worries over sluggish growth.

“We need to tell the truth about the overall economic situation,” Cameron told delegates. “People want to know why the good times are so long coming.”

He insisted that Britain’s program of 81 billion pounds ($126 billion) of public spending cuts, which are seeing thousands of public sector jobs lost and welfare payments axed, would eventually return the country to prosperity.

“Slowly but surely we’re laying the foundations for a better future. But this is the crucial point – it will only work if we stick with it,” Cameron said.

Cameron also took on critics, including many within his party, who demand cuts to Britain’s 8.4 billion pound ($13.2 billion) annual aid budget. Aid spending and health are the only two sectors spared from Cameron’s austerity drive.

“I really believe, despite all our difficulties, that this is the right thing to do,” Cameron insisted. “That it’s a mark of our country, and our people, that we never turn our backs on the world’s poorest.”

The four-day gathering of the center-right Conservatives, who head Britain’s coalition government with the smaller and left-leaning Liberal Democrats, has wrestled with how to kick-start the country’s spluttering economy.

Treasury chief George Osborne said Monday that worries over competitiveness could see Britain slow the pace of cuts to carbon greenhouse gas emissions – once Cameron’s flagship policy as he trumpeted his environmentalist credentials.

Seeking to strike an optimistic message despite the economic gloom, Cameron called on Britons to target emerging markets for new trade and to seize the international spotlight which London’s 2012 Olympic Games will bring.

“Let’s turn this time of challenge into a time of opportunity,” Cameron said. “We can choose to be a country that’s back on its feet and striding forward.”

Brendan Barber, head of union federation the Trades Union Congress, said Cameron’s attempt to inspire Britain would fall flat.

“If the prime minister really felt the nation’s pain, he would change course. Our economic difficulties have gone well past the point where can-do optimism can make a difference,” Barber said.

Delegates at the rally struck a critical tone on Europe, seeing the debt crisis as a new opportunity to press a long cherished cause of loosening ties with the European Union.

Though Cameron has rejected demands for a national referendum on leaving the EU in the near future, he said Britain would limit the help that it offers to its struggling neighbors.

“As long as I’m prime minister, we will never join the euro. And I won’t let us be sucked into endless bailouts of countries that are in the euro either,” he pledged.

In an attempt to offer support to businesses, Cameron pledged to ax a host of Britain’s often derided health and safety laws. “This isn’t how a great nation was built. Britannia didn’t rule the waves with armbands on,” he joked.

Addressing social ills, Cameron said riots which swept London and other major English cities in August – when scores of buildings were torched and shops looted – were fueled in part by poor parenting and a lack of discipline in schools.

“Perhaps the most shocking thing is that people weren’t that surprised,” Cameron said. “We know what’s gone wrong. We know that if the system keeps fudging the difference between right and wrong, we’ll never improve behavior.”

Cameron also hailed Britain’s role in the NATO-led air campaign in Libya, saying it had disproved critics who claim the country’s power is in decline. “Too many thought Britain actually couldn’t do something like that anymore,” he said.

Defense Secretary Liam Fox, in his own speech to the convention, vowed that Britain would continue to defend the Falkland Islands despite cuts to defense spending. Argentina claims the South Atlantic islands, which it refers to as Las Malvinas, and insists on negotiations with Britain over their sovereignty. It follows recent attempts by Argentine President Cristina Fernandez to stir up new hostilities over the islands. Argentina attempted to recapture them in 1982, prompting a brief war with Britain.

© Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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