Cameron Speaks of Very Tough Times Amid Recession Threat

Prime Minister David Cameron said Britain is living through “very tough times,” a day before publication of data that will show whether the economy entered an unprecedented triple-dip recession.

In his weekly question-and-answer session in Parliament today, Cameron emphasized job creation and the government’s plans to narrow the budget deficit, suggesting a change of focus from the economic-output figures that have dominated the political debate. Rank-and-file lawmakers say they will make the same points in campaigning against the opposition Labour Party, which has been pushing for more spending and a cut in value-added tax to boost growth.

“These are very tough times that we are operating in but we have got the deficit down by a third, there are 1.25 million extra private-sector jobs, there is record creation of new businesses in our country,” Cameron told lawmakers in London. “The difference between the two parties is we believe in cutting the deficit. It is their official policy to put it up.”

A decline in output in the first quarter would be a blow for Cameron and Chancellor of the Exchequer George Osborne after Britain lost its AAA credit grade from Fitch Ratings and was criticized by the International Monetary Fund for pursuing policies that hurt growth in the past week.

While the median forecast of 37 economists surveyed by Bloomberg News is for the economy to have skirted a slump and expanded 0.1 percent between January and March, Bank of England policy maker Martin Weale said April 18 that he wouldn’t be surprised if GDP fell. The Office for National Statistics will release the data at 9:30 a.m. tomorrow.

Austerity Question

Cameron made his comments in response to a question from Conservative Party legislator James Wharton, who asked whether Labour’s plan to ease austerity after 2015 “would risk squandering” the government’s efforts to reduce the deficit.

Six years since the start of the financial crisis, the U.K. has failed to recover the slump in output, and Cameron has had to move out by two years his hope of balancing the budget by 2015, even amid the biggest fiscal retrenchment since World War II.

Lawmakers from Cameron’s Tories, concerned that the economy may harm their chances in May 2 local elections, said they would concentrate on persuading voters that other economic measures matter more.

“I am not worried about tomorrow at all; there is a big difference between GDP and wealth creation,” Robert Halfon, a Tory lawmaker said in a telephone interview. “The ‘cost of living’ will be the three words that win or lose us the next election.”

Bond Yields

Mark Garnier, a Tory on Parliament’s Treasury Committee, pointed to “incredibly low bond yields” as proof Osborne’s plan is working, though he said debt-rating downgrades combined with a possibly negative GDP figure would be “a difficult message to sell” to voters.

“They are bound to refocus on things they have got, such as relatively good employment rates and inflation under control, rather than things they haven’t got, like growth,” Tim Bale, professor of politics at Queen Mary University of London, said in a telephone interview. “They will still be hoping for growth and the message at the election will be that the medicine paid off.”

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