The world is on the brink of another deep economic crisis but Britain must stick to its deficit-cutting plans, British prime minister David Cameron said today, urging patience and calm while his coalition government tries to reshape a faltering economy.
Mr Cameron, faced with new evidence today that Britain's economy hardly grew at all in the nine months between October last year and June of this year, is under increasing pressure to soften his austerity plans and to act to spur growth.
But the Conservative leader, speaking to his party's annual conference, insisted the only way to get Britain moving forward was to get its public finances in order and build a new economy based on advanced manufacturing, life sciences and technology.
"Our plan is right. And our plan will work. I know you can't see it or feel it yet ... But this is the crucial point: it will only work if we stick with it," he said in the northern English city of Manchester.
"I know how tough things are. I don't for one minute underestimate how worried people feel, whether about making ends meet, or the state of the world economy. But the truth is, right now we need to be energised, not paralysed by gloom and fear."
The Conservative-Liberal Democrat coalition government's growth strategy has been criticised for focusing too heavily on long-term changes such as building better infrastructure and rebalancing the economy towards manufacturing and exports.
Critics also say Britain's social fabric is being damaged by austerity, pointing to rising unemployment, some families unable to afford a month's food and more shocking evidence of social breakdown - summer riots that tore through several city centres.
Unions are also mobilising, with public sector unions planning for another day of widespread strikes over pension reform next month.
The coalition took office in May 2010 and has made deficit reduction its priority.
Government officials admit there is little that can be done to boost Britain's economy immediately without abandoning a set-in-stone, four-year deficit reduction plan which will cut departmental budgets by a fifth and hike taxes across the board.
They also say there is no effective way to insulate the economy against a debt crisis in Europe, Britain's main trading partner.
"The threat to the world economy, and to Britain, is as serious today as it was in 2008 when world recession loomed," he said. "It is an anxious time."
Despite Britain's dependence on European export markets, Mr Cameron said he would not "let us get sucked into endless bailouts of countries that are in the euro".
Mr Cameron has argued that Britain, with a deficit running close to 10 per cent of national output, has to focus on cutting its mountain of borrowing or face the wrath of financial markets that have brought peripheral euro zone nations to their knees.
"The only way out of a debt crisis is to deal with your debts," Mr Cameron said. "That's why households are paying down their credit card and store card bills. It means banks getting their books in order. And it means governments - all over the world - cutting spending and living within their means."
He toned down an earlier draft of the speech that some newspapers had interpreted as a call for consumers to stop spending.
The main economic message from the Conservative party this week has been for Britons to grin and bear it while ministers clear the debt and rely on the Bank of England to spur growth by keeping interest rates low.
The central bank could begin another phase of quantitative easing, money printing for asset purchases purposes, tomorrow but that may not be enough to kick start growth and keep the deficit plan on track.
Reuters