U.K. Prime Minister David Cameron sees trouble ahead for the world economy as he addresses the seldom publically discussed debt crisis that certain mathematically focused professional investors are keenly focused on.
David Cameron: Britain is not going to waver on dealing with its debts
Saying “it is more important than ever that we send a clear message to the world that Britain is not going to waver on dealing with its debts,” Cameron noted this is a key reason the U.K.’s economy has been outperforming the eurozone. “This stability is vital in attracting the business and international investment that delivers growth and jobs, and which keeps long-term interest rates low. So we will stick to our plan on the deficit and continue to use monetary policy to support growth without adding to borrowing or debt.”
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There are storm clouds on the horizon, he noted. Speaking from the G20 meeting of world leaders in Brisbane, Australia, Cameron said that “Six years on from the financial crash that brought the world to its knees, red warning lights are once again flashing on the dashboard of the global economy.”
David Cameron doesn’t like what he sees around eurozone
Cameron looks around the eurozone and doesn’t like what he sees. As the European Central Bank figures out how it will implement stimulus, the mainland economy is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too. Emerging markets, which were the driver of growth in the early stages of the recovery, are now slowing down, Cameron said. Uncertainty from Ebola and Russia’s “illegal” adventures in the Ukriane are all adding to a “dangerous backdrop of instability and uncertainty.
The odd point of analysis Cameron comes from is that the British economy, unlike that in the eurozone, is growing. While the U.K. is a bright spot, Cameron notes the interconnected nature of the world will eventually impact the U.K. economy, which can already be seen in manufacturing and export data.
His solution is to stay the course of difficult economic choices the island nation made and avoid the economic fads dealing with government debt that promise gain without pain. In the past “too many politicians offered easy answers, thinking we could spend, borrow and tax our way to prosperity,” he said. “Those were the wrong answers then; they are the wrong answers now,” adding the U.K. is not going to repeat the mistakes of the past.