BRITAIN must stick to its deficit reduction plan, the head of the Organisation for Economic Co-operation and Development (OECD) said yesterday, speaking from Davos.
Asked if Tuesday’s negative GDP figures should prompt a rethink of the deficit cuts, secretary general Angel Gurria piled support on David Cameron’s coalition government.
“No, they should stay the course,” he said. “The plan cleared the markets in terms of its credibility. It’s what was necessary. The fiscal situation in the UK absolutely requires this approach.”
The OECD expected Britain to have positive, albeit modest, growth in 2011 and “perhaps somewhat more robust growth in 2012,” he added.
“Of course there are short term implications but without it there will be no medium and long term growth,” he said.
And price pressure are nothing to be worried about in the UK, Gurria claimed.
“They [inflation pressures] are a result of the weakness of the pound, and a result of the spike of the prices of both food and energy,” he said.
On Tuesday Bank of England governor Mervyn King said inflation could reach between four and five per cent.