Prime Minister David Cameron has vowed he will not change course on the economy, insisting that the Government’s decision to make sharp cuts in spending to pay down the deficit was right and “we have to see it through”.
Mr Cameron has come under intense pressure to draw up an economic “Plan B” amid fears that his austerity measures are driving Britain into “double-dip” recession, after the latest GDP figures showed the economy shrank by 0.5% in the last quarter of 2010.
He acknowledged that 2011 will be a “difficult and painful” year, but insisted he will stay the course, warning that scaling back cuts would undermine the confidence of the markets.
But he held out the prospect of assistance for motorists, giving his strongest hint yet that the March 23 Budget may include a “fair fuel stabiliser” to soften the impact of petrol price rises by cutting duties as the cost of oil goes up.
Mr Cameron told BBC1’s Breakfast: “I won’t hide from people that this is going to be a difficult year but I think we just have to keep on explaining… that if you don’t deal with your debt and your deficit, you can end up like Greece or Ireland – in a real mess.
“We mustn’t do that, so we have to go through this difficult year. The Opposition is suggesting an alternative. I just happen to think they are wrong.
“If we suddenly said ‘We are going to tear up our Budget plans, we are going to turn the taps of Government spending back on again, we are not going to care about the deficit’, I think the rest of the world would say ‘How can I have confidence in Britain if they are not going to pay down their debts?’
“There are always people suggesting alternatives, but I think our course is the right one and we have to see it through.”
On petrol prices, which have hit record highs of around £1.30 a litre as a result of increases in the global cost of oil and this month’s hike in VAT to 20%, Mr Cameron said: “What we are trying to do is have a system where, when the oil price goes up, we share the difficulty of that with the motorist. I think that’s fair. That’s what we are going to try to do.”
Chancellor George Osborne hinted last week that he was considering scrapping a 1p rise in fuel duty scheduled for April, but Mr Cameron did not refer to this option.