The man in charge at investment bank Goldman Sachs, Lloyd Blankfein, has told the Chancellor George Osborne that he must stick to his austerity plans or face losing confidence from global markets and investors.
Mr Blankfein told the BBC that he would like the pace of the cuts to be eased but that this could not be at the expense of letting the deficit go up.
Unlike other global organisations such as the IMF, who last week said that Mr Osborne should change tack and relax the spending cuts, Mr Blankfein believes the government needs to “stay the course”.
Last week the IMF’s Chief Economist, Olivier Blanchard urged the UK to rethink its austerity policy as the economy continues to struggle.
Mr Blankfein said: "You would like at this part of the cycle not to cut, to push out austerity and not to shrink the economy.
"But if you have a big deficit you lose that optionality. The choices get taken away from you."
The UK economy grew by just 0.4 per cent in 2012 and organisations from the IMF to the Office for Budget Responsibility have all cut forecast for growth in 2013 recently. The latest consensus is for growth of 0.7 per cent in 2013.
Later this week the first estimate of GDP for the first quarter will be published by the Office for National Statistics (ONS). If the economy is found to have shrunk then the UK will have slipped into a triple-dip recession.
Today, the ONS published details of government borrowing in this financial year. It came in at £120.6 billion, just £0.3 billion less than last year. This means it will take until at least 2017-18 for the deficit to start falling, three years longer than the government predicted when it came to power in 2010.
The combination of a high deficit that is not coming down at the rate Mr Osborne predicted and low growth has led to the UK having its AAA credit rating cut by two of the leading credit ratings agencies, Fitch and Moody’s.
Meanwhile, European Commission president José Manuel Barroso joined the chorus of officials calling for a relaxation of the austerity policies that are dominating a debt-ridden Europe. He said the policy no longer has the backing of the public which it needs in order to make it work.
And Bill Gross, manager at the world’s largest bond fund for Pimco says that policies in the UK and Europe to cut the deficit too fast are stifling the global economic recovery.
He told the Financial Times: “The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not. “You’ve got to spend money.”