UK Politics

Cameron: UK must hold firm among global 'warning signs'

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Media captionDavid Cameron: "When it comes to growth...it is Britain and America that are leading the pack"

David Cameron has told MPs that the government will stick to its economic strategy amid growing threats to the recovery from global instability.

The prime minister said the UK was "leading the pack" in its performance but there were growing "warning signs" elsewhere, with weak growth in Europe and a slowdown across Asia.

Only by holding firm, he said, could a "better future" be secured for the UK.

But Labour's Ed Miliband said the PM was "getting his excuses in early".

Mr Cameron was making a statement to Parliament on the state of global economy and the outcome of the G20 summit of world leaders in Australia.

He condemned the murder of US aid worker Abdul-Rahman Kassig by militants from the group that calls itself Islamic State.

The UK would not be "cowed" by terrorists, he said, confirming proposed new counter-terrorism laws authorising the police to confiscate the passports of UK citizens who have been fighting in Syria and Iraq would be published before the end of the year.

'Difficult decisions'

On the economy, Mr Cameron said the UK had been in the vanguard of agreeing a £2.1 trillion package to stimulate growth and job creation across the world's top economies.

Analysis

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The UK was outperforming other countries, he told MPs, arguing the "figures speak for themselves", with growth of 3% and the largest falls in unemployment on record.

"Because of the difficult decisions we are taking, the economy is doing well," he said.

But he said the situation across Europe, where Italy is in recession and Germany barely registering any growth, was "worrying" and the eurozone "needed to properly fire up".

"World trade is not developing as fast as it should, previous fast-growing economies are slowing down and only today Japan entered recession," he added.

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Media captionGeorge Osborne: "The British economy is performing strongly"

"These warning signs in the global economy show that it is more important than ever that we stick to our long-term economic plan. That is the only way we can secure a better future for our country."

Earlier, in an article in the Guardian, Mr Cameron said "red warning lights are once again flashing on the dashboard of the global economy".

'Deep problems'

In response, Mr Miliband said Mr Cameron had "gone from saying everything is fixed thanks to him, to everything is not fixed, but it's nothing to do with him".

The British people, he added, saw "deep problems in an economy that is not working for them".

Data released on Monday showed Japan is in recession after its economy contracted in two consecutive quarters.

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Media captionLabour's Rachel Reeves says the government needs to do "much more to secure the economic recovery for ordinary working people"

Italy returned to recession last week after its economy shrunk 0.1% in the third quarter while Germany narrowly avoided the same fate with growth of just 0.1% between July and September.

By contrast, the Bank of England has forecast that the UK economy will grow by 3.5% in 2014, remaining resilient in the face of the "subdued world demand".

But in its latest update last week, it also warned that there were risks from the global economic situation and it revised down its forecasts for UK output next year.

Analysis

BBC News economics editor Robert Peston

David Cameron, perhaps learning a lesson from his stockbroker father, got his timing right.

On the morning that he warns that red lights are flashing on the dashboard of the global economy, Japan announces that it has unexpectedly crashed into recession.

Japan is still the world's third biggest economy. And its economic contraction, which caught markets by surprise, coincides with the prolonged flat-lining of the eurozone and what looks like a long-term deceleration of growth in China.

Is the global economy headed for the rocks?

Speaking on a visit to a factory in Kent, Chancellor George Osborne said the UK faced "plenty of risks" despite recent positive economic indicators.

"The British economy is performing strongly, but we're not immune to developments in the world," he said.

"It is all the more reason we have to go working through our long-term economic plan, all the more reason we have to resist those who say we can borrow and spend more - that would take Britain back to square one."

Mr Cameron's comments come three weeks before Mr Osborne delivers his Autumn Statement - the last before May's general election.

'Flawed euro'

The BBC's assistant political editor Norman Smith said the chancellor's update on the state of the UK economy was likely to be an "austere" one with no pre-election giveaways.

Ministers welcomed figures published last week showing average earnings are now rising faster than prices for the first time in five years, saying their economic strategy was starting to bear fruit.

David Blanchflower, a former member of the Bank of England's Monetary Policy Committee, told BBC Radio 4's The World at One austerity had "failed".

"Economies naturally recover as long as you leave them alone," he said. "I would argue that these are problems that the government should have prepared for."

But former Conservative Cabinet minister Liam Fox said many of Europe's economic ills were due to its use of a "fundamentally flawed and politically dangerous" single currency.

He told MPs that its members' economic fortunes were being "sacrificed on the altar of a political project".

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