Cameron: No change to UK debt crisis plan

The government will not change tack in its efforts to reduce the budget deficit despite the lack of UK economic growth, the prime minister has said. The International Monetary Fund cut its UK growth forecast for this year and next and inflation has risen to 4.5%. Cumulative public sector net borrowing is currently at £52bn - only 7% less than a year ago despite budget cuts. As the eurozone crisis deepened, David Cameron insisted to ABC News that Britain was not in trouble. No 'money taps' Speaking in the US, he said the government was dealing with "a debt crisis... not a traditional cyclical recession where you just turn on the money taps". He said: "You have got to deal with the debts and pay for your debts as well as having a very strong growth strategy." During August public sector net borrowing was a higher-than-expected £15.9bn. Continue reading the main story “Start Quote We are not in trouble because we have actually shown the world we have a plan to deal with this” David Cameron Prime Minister Last week the Treasury denied it was discussing how to inject up to £5bn into the economy without abandoning its deficit reduction strategy. Mr Cameron said there would be no changes to the government's austerity measures. "We have to deliver on the programme, that is vitally important to prove to the world we can pay our way and to keep our interest rates," he said. The Bank of England's monetary policy committee has agreed to keep interest rates unchanged at 0.5%, which the prime minister welcomed. "We have interest rates at the same level as Germany - down to 2%," he said. As the eurozone crisis worsened still this week, there was more volatility on the world's share markets, including the UK's. City worker walks past a sale sign The UK's FTSE 100 fell 3.6% last week, as storm clouds gathered over the UK economy The UK's FTSE 100 fell 3.6% over the week, France's Cac 40 shed 4.4% and in the US the Dow Jones dropped 6.4%, its biggest weekly fall since October 2008. But Mr Cameron said that although other countries in the eurozone were struggling to deal with their deficits, the UK was not. "We have a deficit sadly which is, as I say, the same size as Greece and Spain and Portugal - the ones that are in trouble. "We are not in trouble because we have actually shown the world we have a plan to deal with this." Chancellor George Osborne said earlier this month: "We will stick to the deficit reduction plan we have set out. It is the rock of stability on which our economy is built." 'Dangerous phase' But the shadow chancellor, Labour's Ed Balls, said the UK's economic policy needed to change: "We need a plan for growth and jobs for the world, and in Britain we need a change in course too, because rising unemployment, a flat-lining economy, that makes it harder to get our deficit down." Meanwhile some analysts believe that quantitative easing could re-start in the UK in November, as the Bank of England moves to inject more money into the faltering UK economy. City worker sits alone outside Bank of England Some analysts believe quantitative easing could re-start in the UK in November Leader of the Liberal Democrats and deputy prime minister Nick Clegg said this week there was a "long hard road ahead". But he said: "We were right to pull the economy back from the brink. It is clearer now than ever that deficit reduction was essential to protect the economy." The IMF has said it will take decisive action to tackle the eurozone debt crisis but Mr Osborne said allowing Greece to default on its debts was not put forward. Greece has been awarded bail-outs to the tune of 219bn euros to try and stabilise its economy. After IMF talks, Mr Osborne said: "I think there is a recognition here that the debt crisis has reached a dangerous phase. "But we are optimistic that we have taken a step towards resolving it."