Restoring United Kingdom’s economy to top next PM’s agenda

The last round of TV debates in Britain before the general election in May was devoted to the topic of the UK’s battered economy, which with a national debt of $250 billion is bound to be a major factor in public voting.

It is the first time Britain has held American-style televised debates with the UK’s three main political parties trying to gain support ahead of May 6, when the country goes to the polls.

Opinion polls say Prime Minister Gordon Brown’s Labour Party is in big trouble – languishing third behind Nick Clegg’s Liberal Democrats, while the biggest opposition party, the Conservatives, led by David Cameron, remains just ahead.

Economic policy and fighting the way out of the national debt is likely to make or break the next ruling party.

The Institute for Fiscal Studies says Britain must slash its budget by $100 billion in the next five years – with the country one of the most indebted in the European Union. This year alone the UK borrowed $245 billion.

Critics say the parties’ manifestos only account for $23 billion of the cuts needed – with none saying precisely how they will meet the European Union’s targets to reduce the national debt. Already comparisons are being made with the beleaguered Greeks.

“As we can see just across the other side of Europe, in Greece, what happens when you run up too much debt, when you have a government that does not come clear about its debt, its deficit and its responsibilities. Internally your economy can go into crisis; externally investors start to wonder whether you are a good bet after all. Britain’s reputation has taken a real hammering in the last couple of years,” says Mark Wallace, from Taxpayers Alliance.

What ordinary people are concerned about is in what areas the cuts are going to be implemented.

“I still think it is quite vague – David Cameron is the only one who touched on repairing the deficit,” said a resident from North London. “I want more clarification about where the cuts are going to be.”

Some economic analysts say the UK might even need the radical option of bailout from the International Monetary Fund.

“I think there is a chance the IMF will have to be called in. Whoever the next government is, whatever shade or shades of political opinion are represented, the next government will have a one-off chance of getting things right, and they will have to start doing it quickly. But if that fails, calling the IMF in has to be a realistic possibility,” says Mark Littlewood, director of the Institute of Economic Affairs.

It is still unclear who will be the man to drag the UK out of its economic woes. What is clear is that he will have to start doing it as soon as possible, before it is too late.

Justin Urquhart-Stewart, economist, says the country is in a rather difficult economic situation.

“There are growing areas of the economy, particularly the smaller and medium size areas. But what it’s got is a very large state sector at the moment, which cannot afford to carry on as it is. The economy is slowly coming out of recession, but it is very slow indeed,” says Urquhart-Stewart.

However, the economist points out that the economy can plunge into recession again once the government money is taken out of the system in terms of taxation next year.

“Whoever does win is probably going to be the most unpopular prime minister in modern history,” concludes the economist, pointing out that ruthless measures are necessary to get the economy moving again.