Cameron unmoved by strikes threat

Mr Cameron used a speech at the World Economic Forum in Davos, Switzerland, to stress that there were “no short cuts” to a stronger economy.

In a separate speech in the Swiss ski resort, the Chancellor dismissed the “siren voices” urging the Government to pull back from the cuts.

But trade union officials met in London yesterday to discuss the prospect of industrial action over the pay freeze and job cuts in the public sector.

After the growth figures earlier this week showed the economy shrank by 0.5 per cent in the final quarter of 2010, research published yesterday showed a dramatic fall in consumer confidence.

Mr Cameron warned that the scale of the challenge facing the British economy was “immense” and required a long-term “transformation”.

“It’s going to be tough – but we must see it through. The scale of the task is immense, so we need to be bold in order to build this economy of the future,” he said.

“The British people know these things. They understand there are no short cuts to a better future.”

He added: “Those who argue that dealing with our deficit and promoting growth are somehow alternatives are wrong. You cannot put off the first in order to promote the second.”

Labour has accused the Tory-Liberal Democrat coalition Government of sacrificing growth with overly aggressive spending cuts.

Mr Osborne said yesterday that heeding Labour’s calls would lead to “disaster”.

He told a business leaders’ lunch: “It’s clear that for some that temptation remains – a bit more government spending here, pumping the bubble back up a bit there.

“We are absolutely clear – allowing ourselves to be seduced by those siren voices would only lead to even greater disaster down the line.

“Right now the right long-term choices for the economy are the difficult choices. Adjustment will not be without struggle.”

The Chancellor promised to use the forthcoming Budget to tackle “the forces of stagnation” in the British economy.

Acknowledging calls for lower taxes and less regulation, the Chancellor said he would be as “bold” in unleashing enterprise as he had been in cutting the deficit.

He stressed that he wanted “the most competitive business tax regime of any major Western economy” and that he was “very conscious” of the effects of current levels of personal tax.

“Our competitiveness has suffered a lost decade,” he said.

“That is why this coalition Government will be just as bold in promoting enterprise as we have been in dealing with the deficit.

“The ambition of my Budget on the 23rd of March will be to turn the tide on the forces of stagnation.”

His comments came as Tory Mayor of London Boris Johnson urged Mr Osborne to “set a course for low tax” in the Budget.

Earlier this week Sir Richard Lambert, the outgoing head of the CBI, also called for a “road map” towards lower personal taxes.

But the head of the TUC warned yesterday that coordinated industrial action was under consideration as unions step up their campaign against the Government’s programme.

Brendan Barber said the public sector unions would be meeting monthly: “The TUC will step up its work co-ordinating the industrial work of unions,” he said.

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