Despite the IMF’s reduction in its expectations for UK economic growth, the rise in inflation rates and public sector borrowing at higher levels than predicted, Prime Minister David Cameron is confident that Britain is not in trouble and the plans that have been put in place to reduce the deficit will remain as they are.
Mr Cameron, who was speaking in the US, has claimed that the UK is prioritising lowering its debt levels and not just increasing economic growth for the time being and therefore, there will be no changes made to the government’s austerity measures.
He went on to explain that, although Britain’s deficit is of the same size as other eurozone countries that are currently slipping into dangerous waters, including Greece, Spain and Portugal, the reason it is not having as much difficulty is that the government has been able to provide a structured, reassuring plan on how it will deal with its debts and therefore, it is of vital importance that the plan is seen through to the end.
However, it appears that perhaps the austerity measures being taken are not as reassuring as was hoped as the world’s share markets, including the UK’s, saw massive falls last week. The UK’s FTSE 100 fell 3.6%, France’s Cac 40 saw falls of 4.4% and the Dow Jones in the US experienced its biggest drop in a week for the last three years.
Chancellor George Osborne however, is of a similar opinion to Mr Cameron as he spoke out this week arguing that the plan to reduce the deficit is of great value to the stability of the UK’s economy and should not be altered.
Although Mr Cameron and Mr Osborne seem to remain unfazed by the considerable falls in the markets, Shadow Chancellor Ed Balls is not so certain. Mr Balls has highlighted rising unemployment levels and sluggish economic growth as sufficient grounds that the current measures are not enough. His argument is that the UK needs to focus more on its development and not just spending cuts if we are to achieve adequate levels of economic growth.
However, as the situation in Greece worsens and concerns rise over whether it will default on its debt, despite two bailout packages totalling aproximately 219Bn euros, deputy prime minister Nick Clegg has said the governemnt is justified in placing the reduction of Britain’s debt as the number one priority.
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MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.