Eurozone crisis has 'chilling effect' on British economy: PM

21st November 2011, Comments 0 comments

The eurozone sovereign debt crisis is having a "chilling effect" on Britain's struggling economy and there is no "silver bullet" to fix the country's problems, Prime Minister David Cameron said Monday.

Cameron, addressing the annual conference of the Confederation of British Industry, said his government would soon unveil credit-easing plans for small businesses, alongside measures to combat record youth unemployment.

The CBI is calling this year for the government to help boost exports, especially to emerging markets, so as to drive a struggling economic recovery that has been hit by the eurozone crisis.

"Paralysis in the eurozone is causing alarm in the markets and having a chilling effect on economies in many countries -- including our own," Cameron said in a keynote address to the gathering in London.

"When the nightly news is about rising interest rates in Europe and uncertainty about the future, it is not surprising that this affects business and consumer confidence."

He added: "I am absolutely clear about the right answer for the UK economy. It can be summed up in one sentence: we need to deal with our debts and go for growth."

Cameron's Conservative-Liberal Democrat coalition has sought to slash spending since it came to power last year, when it ousted the previous Labour administration and inherited a record public deficit.

However he stressed on Monday that there would be no easy answer to restore business confidence and fix the flagging economy.

"I don't think there is one silver bullet that will make British business say 'this is it'," he told the CBI.

Cameron said the government was pressing ahead with major infrastructure projects that would strengthen the economy, including improvements to roads, railways, broadband Internet services, power stations and ports.

Earlier on Monday, the premier had launched plans to help boost home loan financing for first time buyers, in a move aimed at breathing new life into a struggling property market.

The government has pledged to help support new mortgages for up to 100,000 people who would otherwise be locked out of the housing market.

"Everyone agrees now that Britain's economy had become lopsided -- too dependent on debt, consumption and financial services. Well, we are putting that right," he said.

© 2011 AFP

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