David Cameron has warned problems in the Eurozone “pose a real risk to our recovery at home” because of the interconnected nature of global trade. The Prime Minister made the warning in the Guardian ahead of the next month’s Autumn statement, which is expected to lack the major tax cuts the government had hoped to include.
Cameron said the “red warning lights are once again flashing on the dashboard of the global economy” and the Eurozone “is teetering on the brink of a possible third recession”. As a result it is now less likely that the UK will benefit from its recent economic successes, including a major fall in unemployment.
He warned that Britain could not insulate itself completely from the problems faced by the rest of the world which he blamed on tax and spend economics. He said: “When we faced similar problems in recent years, too many politicians offered easy answers, thinking we could spend, borrow and tax our way to prosperity. Those were the wrong answers then; they are the wrong answers now.”
The Prime Minister is widely believed to be managing expectations ahead of the general election next year. He had previously pledged to have completely eradicated the deficit by 2015, but this now looks unlikely. This means the UK national debt will have continued to increase during David Cameron’s premiership, which risks his message that the Conservatives are the party that can be trusted with the economy.
The government is now expected to talk down the likelihood of tax cuts in the Autumn Statement but there are still rumours in Westminster that the Chancellor will still ‘pull some rabbit out of the hat’ in December. However, the EU is proposing almost no reforms of the Eurozone and as a result a European wide recession may follow in 2015.