Britain’s economy will be hit hard by further turmoil in the eurozone, David Cameron has warned, despite widespread relief on world financial markets as a new leader was installed in Greece and Italian politicians backed harsh austerity measures.
The prime minister insisted a “big question mark” remains over the future of the single currency, amid signs that the political impasse in Italy that sparked panic among investors may be close to a resolution. George Osborne, the chancellor, described events on the continent as “dangerous”, adding: “There’s no doubt that growth in Britain, jobs in Britain, have been hit by what’s going on in the eurozone.”
The fragile state of Britain’s economy will come back into focus next week, with the latest jobless figures expected to show that public sector job cuts and the collapse of confidence among businesses have caused unemployment to rise rapidly.
The number of young people out of work is expected to hit 1 million, and with Osborne due to deliver his autumn statement on 29 November, pressure is increasing on the government to take urgent action to boost economic growth. The deputy prime minister, Nick Clegg, tells today’s Times that Osbornes’s autumn statement must deliver for the young, adding that it is “morally imperative” for the government to act.
The chancellor made clear that he intends to blame events across the Channel for the deteriorating economic outlook and to insist that deviating from his deficit-cutting strategy would expose the UK to the kind of loss of investor confidence faced by Italy in recent days.
“It’s all the more reason that we in Britain weather this storm by taking the difficult decisions we take on our own terms – rather than being forced to do so by the markets,” he said.
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