Cameron defends austerity, urges Europe to follow

[January 28, 2011]  DAVOS, Switzerland (AP) -- British Prime Minister David Cameron urged other governments to follow his country's efforts to cut spending and reduce debts, calling the piles of debt weighing on the world's rich countries an obstacle to trade and growth.

"Our first priority is to kill off the specter of massive sovereign debts," he said Friday at the World Economic Forum. "In many ways, we in Europe have been our own worst enemy" by building up debts and keeping too many barriers to money and trade flows, he said.

Cameron, whose Conservative-led coalition government has imposed tough measures -- from tax hikes to budget caps and an increase in value-added tax paid at the cash register -- to reduce the country's budget deficits. The cutbacks have led to protests and criticism from some quarters that cuts will undermine growth.

"Remember what we started with in the U.K.: an economy built on the worst deficit, the most leveraged banks, the most indebted households, the biggest housing boom and unsustainable levels of public spending and immigration," Cameron said.

Those cuts, he said, have already had an effect, with the country's credit rating reaffirmed at the triple-A level.

Still, unemployment has risen and thousands will see some form of state benefit cut as the government tightens the belt on spending.

But that is a trade off many other European countries are increasingly resigned to as they try to juggle crippling levels of public debt in the wake of the global financial crisis.

"It is going to be tough, but we must see it through," Cameron said. "The scale of the task is immense, so we need to be bold in order to build this economy of the future. And the British people, I believe, understand these things."

Cameron's remarks came as U.S. Treasury Secretary Timothy Geithner was to spend an hour discussing his country's economic priorities at the meeting in Davos, Switzerland, on his first foreign trip of the year.

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

For Europe, Greek Prime Minister George Papandreou and Merkel will mark opposing poles on the spectrum of economic recovery when they take the stage in Davos Friday. Bailed-out Greece is still mired in recession whereas Germany has rebounded to expand at the fastest pace since its reunification two decades ago.

The U.S. lies somewhere in between. Geithner will talk about priorities for the U.S. economy, which despite the return of growth is still trying to reduce the unemployment rate in the wake of the financial crisis.

The woes of wealthy countries will contrast with the more upbeat tones in speeches by leaders of developing economies such as Indonesian President Susilo Bambang Yudhoyono and Mexico's Felipe Calderon.

Not far from the conference, social activists are planning to use the occasion of the forum to name and shame the corporation with what they consider the the worst social or ecological record in 2011. The same event will see the launch of OpenLeaks, billed as a rival to the secret-spilling website WikiLeaks.

___

Online:

http://www.weforum.org/

[Associated Press; By FRANK JORDANS and MATT MOORE]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.