Clearing debt ‘harder than anyone thought’

But the Prime Minister blamed those same debts for acting as a “drag on growth” and insisted that the Government had to press on with its deficit reduction plans.

Speaking to business leaders at the CBI conference in London yesterday, Mr Cameron insisted there was no justification for claims that additional spending now would pay off later.

“Yes, getting debt under control is proving harder than anyone envisaged. High levels of public and private debt are proving to be a drag on growth, which in turn makes it more difficult to deal with those debts,” he said.

“But this also undermines further the case for adding to the national burden of debt with even more borrowing.

“Yes, there are some who seriously try to argue that additional spending and borrowing will actually lead to less debt in the end, despite the fact that no evidence supports this assertion.

“These arguments are just a way of avoiding difficult decisions, the kind of something-for-nothing economics that got us into this mess, which is why no indebted European country is taking that path.”

Mr Cameron said the crisis in the eurozone was having a “chilling effect” on the economy, but that the UK’s “ills” could not be blamed on that alone.

“No-one else is responsible for our own debts or our deficit,” he said.

The Prime Minister acknowledged that, despite “some encouraging signs” from retail and exports figures, “fears about the immediate future are real”.

“Paralysis in the eurozone is causing alarm in the markets and having a chilling effect on economies in many countries, including our own,” he said.

Dealing with the country’s debts were just as important as pushing growth, he added.