Prime minister in debt warning if austerity fails

Failure to carry through the programme to lower Britain's public deficit could leave the UK unable to pay its bills like Italy and in a situation where many could suffer increased debt burdens and even repossessions, prime minister David Cameron has warned.

The coalition government's debt reduction strategy has faced criticism from opponents such as the Labour Party, which has labelled it as "too far and too fast".

But in an interview with BBC Radio 2's Jeremy Vine programme, Mr Cameron said: "If we risked spending a lot more money or giving up on our plan to get on top of our debts and our deficit, interest rates could go up, mortgage rates could go up. That would be the worst thing for family finances."

He made the comments amid growing fears that Italy and Greece may be unable to pay their way and tackle their own deficits, with the possibility that the eurozone could face a recession or even see the single currency collapsing.

Mr Cameron described the situation as "very worrying" and said there is a "big question mark" over future of the euro.

A new economic downturn in the eurozone could leave more Britons in debt trouble due to the job losses that would result from a decline in trade.

One solution in terms of wider economic policy could be to trade more with non-eurozone countries and in a speech earlier today (November 11th), Mr Cameron outlined government proposals to help firms export more to countries elsewhere in the world, where economic growth is stronger and there is the potential for Britain to develop growing export markets.

Posted by Paul Thacker