British PM seeks to calm fears over budget cuts

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British Prime Minister David Cameron on Sunday defended budget cuts as necessary to prevent a Greek-style meltdown as his Conservative Party kicked off its annual conference.

Two weeks before Cameron's government unveils a spending review likely to force many departments to slash spending by 25 percent, the premier also tried to reassure Britons over their impact, while acknowledging hard times ahead.

The conference in Birmingham, central England, is the centre-right Conservatives' first since they took power in a coalition government with the centrist Liberal Democrats in May after 13 years in opposition.

Their biggest challenge is to tackle Britain's record deficit of 154.7 billion pounds (188 billion euros, 242 billion dollars) bequeathed by the previous Labour government.

In a round of pre-conference interviews, Cameron said the coalition had inherited a "complete mess" from his predecessor Gordon Brown but that its emergency budget in June had taken Britain "out of the danger zone".

"We were linked with Portugal, Greece and Spain, those countries that were at risk of a credit downgrade with interest rates going up," Cameron told the BBC.

"We've taken Britain out of that danger zone and our interest rates have gone down."

In an interview with the News of the World, he suggested that the cuts may not be as painful as some fear.

"Let's put these cuts into perspective," Cameron said. "Many businesses have had to make far greater reductions than us in one year."

Cameron also indicated that agreement had been reached in government on controversial measures to reform the welfare system -- which accounts for a large chunk of annual state expenditure -- in a bid to get people off benefits.

And he promised he "will not take any risks" with Britain's military amid tensions with his Defence Secretary Liam Fox over plans to cut the defence budget.

Elsewhere, he acknowledged that there were "challenges ahead" -- and that some Tories were disappointed the party was forced to team up with former arch-rivals the Lib Dems to form a government.

"Of course there are challenges ahead and yes, there have been compromises as a result of this coalition -- and there will be more in the years to come," he wrote in the foreword to the conference handbook.

Finance minister George Osborne will reveal full details of the spending cuts in a comprehensive spending review on October 20.

In a sign of resistance ahead, hundreds of trade unionists and students took to the streets of Birmingham to hold a noisy demonstration against the cuts, burning red flares and chanting "Tory scum" amid a heavy police presence.

Last month, trade unions voted in favour of possible coordinated strike action against the cuts and to hold a national campaign against the scale of the planned reductions.

And as Cameron sought to offer reassurance of the cuts, former finance minister Kenneth Clarke, Cameron's justice secretary, warned that Britain still risked falling back into "double dip" recession.

"I'm at the more pessimistic end. I'm not sunnily optimistic about where the Western economy is going," he told The Observer newspaper.

"I do not rule out the risk of a double dip recession caused by some fresh wave of global fear and crisis."

Cameron dismissed talk of a new recession and said that the coalition government would press on with its reforms despite opposition criticisms that the cuts would hinder growth.

The Conservative conference comes after Labour's finished Thursday. The main opposition party elected former climate change secretary Ed Miliband as their new leader after Brown stepped down in May.

A BPIX poll in The Mail on Sunday newspaper put the Conservatives on 41 percent, Labour on 37 percent and the Lib Dems on 13 percent. The survey of 2,061 people was conducted on Thursday and Friday.

© 2010 AFP

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