The ruling Conservatives warned Britain on Sunday to brace for further austerity, underlining the tough task facing Prime Minister David Cameron to heal a sickly economy and build support among cash-strapped voters before an election in 2015.
Mr. Cameron’s Finance Minister, George Osborne, said Britain would have to tolerate more spending cuts after a weaker than expected economy this year. He delivers economic growth and borrowing forecasts to parliament on Dec. 5.
Analysts say Mr. Cameron, whose party is languishing behind a resurgent Labour opposition in opinion polls, will struggle to win an outright majority in 2015 unless the austerity plan comes good and the economy bounces back.
The Conservative-led coalition has presided over a return to recession this year, meaning cuts may have to drag through much of the next parliament or even run deeper than originally planned to eliminate a record budget deficit.
“The economy is healing. But it’s a longer and harder road that we have to travel down,” Mr. Osborne said in an interview with the Mail on Sunday. “There will have to be further cuts.”
The government says it must keep its resolve to slash spending to safeguard Britain’s low borrowing costs. Abandoning their austerity plan would also prove politically disastrous for the Conservatives, who staked their 2010 election pitch on it.
“Western countries face a simple choice,” Mr. Osborne said. “Are they going to sink or swim? There will be lots of countries, neighbours of ours, who are going to duck difficult choices. In 20 or 30 years’ time they will be much poorer.”
Beyond the economy, Mr. Cameron also faces problems in his centre-right party, with some arguing he has not taken a tough enough line on Europe and a few calling for a new leader, such as Boris Johnson, the popular Conservative London Mayor.
To pacify the influential anti-EU wing of the party, Mr. Cameron threatened to use Britain’s veto if the 27-nation bloc seeks to inflate its 2014-2020 budget.
“If it comes to saying no to a deal that isn’t right for Britain, I’ll say no,” Mr. Cameron told the Sunday Telegraph, proposing two EU budgets - one for the euro zone and another for Britain and the other nine countries not in the single currency.
Mr. Cameron, due to speak to his party’s annual conference on Wednesday, offered £270-million ($426-million) to local administrations to pay, in 2013-14, for a freezing of council tax, which funds neighbourhood services such as refuse collection.
Rail-fare increases will also be capped at retail price inflation plus 1 per cent in 2013 and 2014, paid for by savings at the Transport Ministry.
Both measures are meant to ease pressure on households during the recession, without softening fiscal policy.