Cameron won't ease austerity after IMF downgrade

BIRMINGHAM, England Tue Oct 9, 2012 1:19pm BST

1 of 2. Britain's Prime Minister David Cameron (L) and his wife Samantha arrive at the Conservative Party conference in Birmingham, central England October 7, 2012.

Credit: Reuters/Toby Melville

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BIRMINGHAM, England (Reuters) - Prime Minister David Cameron said on Tuesday he would not soften his austerity programme with a "Plan B" of slower spending cuts after the International Monetary Fund downgraded its growth forecasts for Britain.

The Conservative-led government, steadfast in its ambition to cut a record budget deficit but under pressure to fix a recession-hit economy, abandoned its original deficit reduction targets last year and could be forced to extend them again.

"What we need in Britain is not 'Plan B', which is more borrowing. How can you borrow your way out of a debt crisis?" Cameron told Sky News, speaking from the Conservative Party's annual conference in the central English city of Birmingham.

"What we need is what I call 'Plan A+', we need to keep our plans, difficult though they are to cut public spending and deal with the deficit, but we need to add to that every measure that business has been asking for. And that's what we're doing."

The IMF cut its UK economic growth estimates on Monday, predicting the economy would shrink 0.4 percent this year before growing by 1.1 percent in 2013. The IMF forecast in July that Britain's economy would grow 0.2 percent this year and 1.4 percent in 2013.

The IMF also said Britain should delay some spending cuts pencilled in for next year if growth turned out to be weaker than forecast, but Cameron said that did not mean there was any logic in ripping up his plans yet.

"The IMF are not saying change course, they are saying stick to your plan unless things get dramatically worse," he said.

Britain's economy fell back into recession at the end of 2011. Analysts expect Britain to return to growth in the third quarter but say that any recovery will be sluggish at best.

Critics, including the Labour opposition, blame government austerity measures for choking off demand but ministers say cutting more slowly would put Britain's market credibility at risk at a time when the euro zone is embroiled in a debt crisis.

"These downgraded IMF forecasts are another damaging blow to the government's economic credibility," said Labour finance spokesman Ed Balls.

Finance minister George Osborne is expected to either announce deeper cuts or to further extend his deficit reduction plan beyond the fiscal year 2016/17 when he delivers updated economic growth and borrowing forecasts on December 5.

Osborne had originally pledged to all but erase Britain's deficit by the time of the 2015 election.

(Editing by Louise Ireland and Alessandra Rizzo)

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Comments (3)
Panier wrote:
It seems incredible that there is an enormous savings to be had if only they looked at the waste they make.
1-1 trillion in servicing the pension fund only a third used as cash to pensioners the rest who knows this would pay off all debt it needs good management sadly lacking with this government.
What would you expect I would suspect they have never been short of money so its impossible for both Cameron and his school mate to understand
Put the railway into a trust operation like Lewis and get some organised management instead of using it as a tax system and screwing the passengers into paying the debt paid to banks at enormous cost to rent rail gear
They have no imagination and still spew out the usual Tory package give to those that have it take off those that do’nt since it wo’nt affect their votes
Its time for a Tory tea party and drain the dregs

Oct 09, 2012 2:02pm BST  --  Report as abuse
Raymond.Vermont wrote:
Cameron won’t ease austerity after IMF downgrade

Meanwhile the coast is clear on the subject of austerity for the well heeled… Well done Dave & Co!

Oct 09, 2012 7:11pm BST  --  Report as abuse
Raymond.Vermont wrote:
New Tory Party manifesto…

1. We pledge to do our utmost to cushion the rich from austerity.

2. The rich will not suffer any pain for living like…The rich.

3. Cuts, as long as its not on our lawns…

Oct 09, 2012 8:03pm BST  --  Report as abuse
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