Tuesday November 16, 2010

UK must repair economy to keep influence - Cameron

By Matt Falloon

LONDON (Reuters) - Britain's global influence is not in decline but the country must repair its economy quickly to remain a leading actor on the world stage, Prime Minister David Cameron said on Monday.

Britain's Prime Minister David Cameron delivers a speech at the Guildhall for the Lord Mayor's Banquet in the City of London November 15, 2010. (REUTERS/Paul Hackett)

Britain is recovering from its worst recession since World War Two but Cameron said the rise of new economic powers did not spell the end of British influence and the country remained a major economic and military power.

"There are some who say Britain is embarked on an inevitable path of decline ... that our claim to the status of a major military power is now a sham," Cameron said in a major foreign policy speech in London's financial district.

"I want to take this argument head on. Britain remains a great economic power," he said.

Cameron came to power in May at the head of a coalition that is determined to slash public spending after a banking crisis and a deep recession sent the budget deficit soaring to 11 percent of national output, a peacetime record.

The squeeze on public spending will lead to cuts in defence and public services and could throw half a million government employees out of work.

Cameron said foreign leaders respected Britain's determination to "get our economic house in order", which was essential if the country was to continue to carry weight in the world.

"Economic strength will restore our respect in the world and our national self-confidence," he said, according to a text of the speech.

UK economic growth has been stronger than expected this year but a slowdown is expected in 2011, largely because of the government's efforts to slash the deficit.

HARD-HEADED APPROACH

Opposition Labour politicians and some economists have said the speed and severity of the coalition's attack on the deficit, with the aim of almost eliminating it before the next election in 2015, could drive Britain back into recession.

Cameron has recalibrated British foreign policy to focus on fostering business ties across the world in an effort to boost exports. Britain has 9,500 troops in Afghanistan, the second biggest foreign force, but defence cuts mean it will not have an aircraft carrier equipped with fast jets for the next decade.

"We ... have to be more strategic and hard-headed about how we go about advancing our national interests," Cameron said.

Britain's relationship with the United States is "crucial" because of close bilateral cooperation on defence, counter-terrorism and intelligence, Cameron said. Britain is also a "strong and active" member of the 27-nation European Union, he said.

But he said there were other areas where British policy needed to change. "We must link our economy up with the fastest-growing parts of the world, placing our commercial interest at the heart of our foreign policy," he said.

Britain will apply the "more strategic and hard-headed" approach to the mission in Afghanistan and will focus more of its foreign aid budget on preventing conflict, he said.

(Additional reporting by Adrian Croft; Editing by Susan Fenton)

News

Tuesday November 16, 2010

UK must repair economy to keep influence - Cameron

By Matt Falloon