Prime minister warns of ongoing austerity

Prime minister David Cameron has warned that austerity measures may continue well beyond the original planned end date of 2015.

In an interview with the Daily Telegraph, Mr Cameron said the situation in the eurozone was likely to have a negative effect on the UK economy, a major exporter to the single-currency bloc.

He remarked: "I can't see any time soon when the pressure will be off. I don't see a time when difficult spending choices are going to go away."

The prime minister suggested the public are also downbeat about the near-term, remarking: "They say it's very difficult, they're quite pessimistic about the state of the world and the state of the world economy and their own finances."

Mr Cameron said there is a logjam in policy terms in Europe as indebted southern European nations expect the Germans to take on some of the debt, but Germany in turn wants them to give up some of their economic sovereignty.

The impact of continued austerity could be to reduce economic growth over a period of several years, with Mr Cameron's gloomy prognosis about the European economic outlook also reducing the rate at which the UK can expand its gross domestic product.

For Britons struggling with debt, this may make it harder to pay off what they owe than if they could enjoy increasing wealth from a growing economy, where wages rise in real terms and there are opportunities to gain better jobs.

Mr Cameron's comments that the public are concerned about their personal finances was borne out by a recent survey by insolvency professionals body R3.

It showed 54 per cent of consumers are worried about their level of indebtedness and 51 per cent are struggling to make it through from one payday to the next. 

The number in difficulty rose to 68 per cent for the 35-44 age range, the study revealed.

By Joe White