Nick Clegg, the deputy prime minister, has today addressed the Liberal Democratic Party conference with a claim that spending cuts were required as soon as the coalition entered office due to the perilous state of the UK’s finances. He, like many people in the coalition government, believes there was a real danger that the UK sovereign credit rating would be downgraded which would not only increase the cost of future finance but also impact upon the reputation of the UK in overseas markets.
The choice was stark for David Cameron and Nick Clegg, continue spending money which the UK government did not have to support the economy or cut back in the short-term, reduce the chances of a credit rating downgrade and attempt to build back confidence in the UK economy from a lower base level. Whether or not the UK government has taken the correct path remains to be seen but it will be interesting to see how the UK finances look in 12 months time.
Recent surveys regarding the UK economy have given very mixed signals but many people are resigned to the fact we will see an economic down turn in the short to medium term after which the UK economy should emerge stronger, leaner and fitter for the future.
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