David Cameron made his conference speech against the background of having to amend his speech this morning.
David Cameron opened his comments about the economy by saying the public says they want the government to, “lead us out of this economic crisis and do it in a fair way.”
He said: “The threat to the world economy and to Britain is as serious as in 2008 when the world recession loomed.
“The eurozone is in crisis, the French and the German economies have slowed to a standstill, even might America is questioned about her debts.”
“It is an anxious time, prices and bills keep going up.... you wonder how our children are going to manage.”
Mr Cameron reiterated the message from the government that too much borrowing was the cause of the current economic crisis.
“But we need to tell the truth about the overall economic situation. People understand that when the economy goes into recession, times get tough but normally after a while things get better. This time, it’s not like that. This wasn’t a normal recession, it was a debt crisis.
“It was caused by too much borrowing by individuals, banks, businesses, and, most of all, by governments.
“When you’re in a debt crisis, some of the normal things that governments can do to deal with a normal recession, like borrowing to cut taxes, or increasing spending, these things won’t work because they lead to more debt which would make the crisis worse.”
Most of the national newspapers and TV and Radio news led with the news that Mr Cameron was going to lecture the UK public on following the government’s lead and repaying our own credit card and store-card debts.
The request for us to do this had been misinterpreted. That was the spin put out by government advisors this morning. What he really meant and what he actually said was that UK households are already doing this.
Either way, a certain amount of damage has been done to the Prime Minister and the government, because the last thing that retailers need is for us to stop spending completely. That would wipe out any hope of economic growth too, and it goes against the Bank of England’s monetary policy. Even if that is not what the message was, it has been interpreted in that way.
This is what Mr Cameron actually said: “The only way out of a debt crisis is to deal with your debts, that’s why households are paying down the credit card and store card bills, it means banks getting their books in order and it means governments, governments all over the world, cutting spending and living within their means.”
Mr Cameron said that that the UK has to stick with the deficit reduction plan for it to work.
“Our plan is right, our plan will work. Slowly but surely we are laying the foundations of a solid future and the vital point is this, if you don’t stick with it, it won’t work,” he said.
He called it a “one nation deficit reduction plan from a one-nation party.”
On the European debt crisis Mr Cameron said that Britain was a part of the International Monetary Fund and would fulfil its obligations, but he said the UK would never join the euro whilst he was in charge and that he will take the UK out of the European Financial Stability Facility (EFSF), to make sure we were not liable for continued funding of bailouts.
On the housing market, Mr Cameron said that “the failure of the housing market is bound up in the debt crisis.”
On Public sector pensions, Mr Cameron said: “Our population is ageing; our public sector pension system is unaffordable, the only way to give public sector workers a decent sustainable pension system which I want to, and to do right by the taxpayer, is to ask public servants to work a little longer and pay a little more.”
On the government growth plan, Mr Cameron pledged to, “cut regulation and to intervene and invest."
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