Cameron warns of 'immense challenges' for UK economy

David Cameron will warn today that the scale of the challenge facing the British economy is "immense" and requires a long-term "transformation".

David Cameron will warn today that the scale of the challenge facing the British economy is "immense" and requires a long-term "transformation".

The British Prime Minister will stress again that he has no intention of easing the Government's deficit-reduction measures, saying there are "no shortcuts" to a stronger economy.

While stopping short of setting a timeframe for the UK's recovery, he will speak of the need for new factories to be built and their products brought to market.

Despite this week's figures showing that the economy shrank by 0.5% in the last quarter, he will insist the coalition government's plan for the economy is already yielding success.

In a speech to some of the world's most powerful business leaders and politicians at the World Economic Forum in Davos, he will say: "We can't just flick on the switch of government spending or pump the bubble back up.

"Making this transformation - and it is a transformation - requires painstaking work and it takes time.

"It involves paying down billions of pounds of debt. New plants and factories need to be built. New products designed. New innovations taken to market. New businesses nurtured.

"It's going to be tough - but we must see it through. The scale of the task is immense, so we need to be bold in order to build this economy of the future.

"The British people know these things. They understand there are no shortcuts to a better future."

He will reject Labour's claims that the Conservative-Liberal Democrat coalition is sacrificing growth with overly-aggressive cuts and insist that reducing the deficit cannot be delayed.

"Those who argue that dealing with our deficit and promoting growth are somehow alternatives are wrong. You cannot put off the first in order to promote the second," he will say.

"Average government debt in the EU is almost 80% of GDP. Some countries are borrowing 5%, 6% or 7% of GDP again this year.

"The figure for the UK is more than 10%. This is clearly unsustainable and action cannot be put off."

Despite the negative growth figures from the Office of National Statistics this week, the Prime Minister will say "progress" is already under way on the economy.

He will point to the credit ratings agencies confirmation that Britain's triple-A credit rating will not be downgraded and falls in market interest rates since the coalition took office.

"All this has happened not in spite of our plan to cut the deficit, but because of it. That's why we must stick to the course we have set out," he will say.

Mr Cameron will tell delegates in Davos that the coalition inherited from Labour an economy with "the worst deficit, the most leveraged banks, the most indebted households, the biggest housing boom and unsustainable levels of public spending and immigration".

"And now think of where we need to go - an economy based not on consumption and debt but on savings and investment, not on Government spending but on entrepreneurial dynamism, not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade.

"To get there isn't easy."

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