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British PM tells Davos: austerity is working

(Agencies)
Updated: 2011-01-28 09:48
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DAVOS, Switzerland - Britain's Prime Minister David Cameron will tell fellow leaders at this year's World Economic Forum that austerity measures imposed by his government are already bearing fruit.

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Cameron's Conservative-led coalition government has imposed a series of tough measures- from tax hikes to budget caps- to reduce the country's debt.

"Already we're making progress," Cameron said, in extracts released by his office ahead of the speech Friday to the annual gathering in the Swiss ski resort of Davos. "Not long ago we were heading toward the danger zone where markets start to question your credibility."

Cameron said Britain's triple 'A' credit rating had been saved and market interest rates had fallen- though unemployment has also risen and thousands will see some form of state benefit cut.

"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."

The message will be particularly keenly heard in other European countries, many of whom are trying to juggle crippling levels of public debt in the wake of the global financial crisis.

The Davos meeting's mood has improved since last year, but the 2,500 government and business leaders attending remained wary this week of the possibility that the global recession might return.

For Europe, Greek Prime Minister George Papandreou and German Chancellor Angela Merkel will mark opposing poles on the spectrum of economic recovery when they take the stage in Davos Friday.

US Treasury Secretary Timothy Geithner will talk about priorities for the US economy.

Developing country woes will be contrasted with speeches by leaders of developing economies such as Indonesian President Susilo Bambang Yudhoyono and Mexico's Felipe Calderon.

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