David Cameron’s pledge to ‘stay the course’ on spending

KEIGHLEY, ENGLAND - MARCH 07: British Prime Minister David Cameron delivers his speech on the economy during a visit to precision grinding engineers Kinetic Landis Ltd on March 7, 2013 in Keighley, England. During his visit to West Yorkshire the prime minister emphasised that he will hold firm on the economy and that any change in the governments route to economic recovery would plunge the UK "back into the abyss". (Photo by Christopher Furlong - WPA Pool /Getty Images)

David Cameron dismissed calls for a borrowing-fuelled capital spending drive, warning it would leave families worse off.

The Prime Minister insisted the coalition would stick to its economic strategy despite business secretary Vince Cable suggesting it was time for a rethink.

Mr Cable suggested “the balance of risk” had changed between deficit reduction and growth, and questioned whether the Government should “borrow more, at current very low interest rates, in order to finance more capital spending: building of schools and colleges; small road and rail projects; more prudential borrowing by councils for house-building”.

However, Mr Cameron said: “There are some people who think we don’t have to take all these tough decisions to deal with our debts,” he said.

“It’s as if they think there’s some magic money tree. Well, let me tell you a plain truth: there isn’t.”

He said the loss of the AAA credit rating last month had been “the starkest possible reminder of the debt problem we face.”

“If we don’t deal with it, interest rates will rise, homes will be repossessed and businesses will go bust, and more and more taxpayers’ money will be spent just paying off the interest on our debts.

Mr Cameron said the Office for Budget Responsibility (OBR) had made clear the financial crisis, eurozone woes and high oil prices were largely to blame for the economy stalling.

“So, those who think we can afford to slow down the rate of fiscal consolidation by borrowing and spending more are jeopardising the nation’s finances, and they are putting at risk the livelihoods of families up and down the country.

“This month’s Budget will be about sticking to the course, because there is no alternative that can secure our country’s future,” he said.