Is David Cameron set to backtrack on spending cuts?
David Cameron's proposed policy of reducing the UK budget deficit in 2010, if the Conservative party wins office, has come under significant attack at this weeks Davos World Economic Forum. Prominent financiers such as George Soros, Robert Shiller and Ken Rogoff have all suggested that the Conservative party would put at risk any short-term recovery in the UK economy if spending cuts were introduced before the economy was back on its feet.
Indeed, it looks as though David Cameron is starting to take notice of various suggestions when he conceded that the depth of potential spending cuts could be reduced if the economy has not recovered after the next election. While he will obviously attract criticism for effectively partaking in a partial U-turn there will be many economists and financiers relieved that he is taking advice from experts.
The truth is that the economy after the election may be very different to the economy before the election and as such various plans, such as those by the Conservative party, may well be thrown into disarray. Nobody is quite sure how the UK economy will perform in the short to medium term and indeed whether significant spending cuts could be supported by the economy. However, we will soon find out!
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