Cameron: deficit must be tackled
Updated on 28 January 2010
Many at the World Economic Forum in Davos have questioned the Tories' policy of cutting the deficit this year, saying spending reductions could lead to a double-dip recession.
But David Cameron defended the policy. He said: "I think you've got to make a start on cutting the deficit in 2010."
In his first interview following this week's poor economic numbers he did concede that a renewed economic contraction meant "the scale of what you might want to do needs to be worked out in conjunction with the Bank of England".
Eminent financiers and economists such as George Soros, Robert Shiller and Ken Rogoff have warned of the danger of cutting too fast, given the UK's fragile economic state.
Rogoff, who has advised the Conservative Treasury team, told Channel 4 News last night "stimulus needs to get withdrawn, at least slowly. I wouldn't do it too fast. We just don't know what it might do".
The Chancellor Alistair Darling, earlier this week, criticised the 'sheer folly' of Tory plans to start cutting this year.
When pushed on whether he would implement that policy in the event of the UK going back into recession, Cameron said: "We're saying we must make a start in 2010, but clearly the scale of what you can do need to be worked out in conjunction with the Bank of England because we want to keep those interest rates low.
"The biggest threat to the British economy is not dealing with the deficit, it's failing to deal with the deficit that is what could give us Greek-style interest rates and higher mortgage rates tipping us back into recession and causing us a real problem for the British economy."
As to whether this was going to be a vote winner, he said: "We've been talking about the scale of the deficit saying we need to cut public spending. I accept these are not traditional ways of winning a general election, but we are being truthful with the British people and I think they respect that."
