As the latest UK economic growth figures were released, Prime Minister David Cameron said Moody’s recent decision to cut Britain’s AAA credit rating underlined the need for more efforts to reduce the country’s deficit.
Yearly growth for last year has just been revised up, but GDP between October and December did fall by 0.3 percent from the previous quarter, keeping alive the danger of a third recession in the UK.
Still, compared with the previous year, the economy was 0.3 percent bigger – better than the original estimate of flat output. That was because the Office for National Statistics said made upward revisions to some previous quarters.
Consumer spending rose 0.2 percent on the quarter, while exports fell 1.5 percent and imports dropped 1.2 percent.
The weak economy and its detrimental impact on the government’s fiscal targets was the reason quoted by Moody’s for stripping Britain of one of its coveted AAA credit ratings at the end of last week.
“Further and faster”
On Wednesday Cameron told parliament: “I’m the one saying this credit rating does matter, and it demonstrates that we have to go further and faster on reducing the deficit.”
The opposition Labour party has said the downgrade proves Cameron’s deficit reduction strategy is not working, but the government has insisted it will not pull back from its austerity drive.
Cameron has also come under pressure from his own ruling Conservative party to make deeper and faster cuts in Britain’s welfare budget to try to win the prized AAA rating back.
Ahead of a March 20 budget speech by finance minister George Osborne to lay out his spending plans for the coming year, investors are looking for any signs the government is considering ratcheting up its austerity push.
But an official spokesman for Cameron said the prime minister had been referring to existing rather than new policy. “The prime minister was setting out the government’s policies as they are,” the spokesman said. “The period of fiscal consolidation has been extended and that’s what the PM was referring to.”