LONDON (MNI) – UK Prime Minsister David Cameron has said that the
government’s deficit reduction plan is needed in order to keep interest
rates low.

“The reason we are doing these things on the deficit is simple. We
want to keep interest rates down for hard-working families up and down
the country. Higher interest rates would mean higher mortgages, lower
employment and more of people’s money that they’ve worked so hard to get
spent on wasted interest rates on our national debt,” Cameron told the
House of Commons.

Cameron also said that the government must get the UK economy to
rebalance away from its dependence on public sector spending and
financial services.

“We have to do more to rebalance our economy. It is clear what went
wrong. The public sector grew too large, our economy became unbalanced
between North and South, we ended up too dependent on financial
services. We’ve got to revive the private sector, we’ve got to spread
growth and jobs across the country and we’ve got to make sure financial
services truly serves the country, not the other way around,” Cameron
said.

The prime minister also said that the government will take steps to
make the banking system safer and avoid any future taxpayer bailouts of
financial institutions, a reference to its commitment to implement the
findings of the Vickers Report which has urged the ringfencing of
investment banking from retail banking operations.

Cameron noted comments from BOE Governor Mervyn King last week on
key elements of bank reform and said that the government would implement
all of them:

“There are three vital steps and we will be taking all of them.
Proper regulation, at last, by the Bank of England. Banks made to hold
enough capital to keep them safe and a regime so if they do fail they
can fail without the taxpayer picking up the bill,” Cameron said.

Cameron also said that the government is making sure that the UK
does not have to contribute to any euro zone bailout funds.

“We’re also making sure that the UK is taken out of the euro zone
bailout fund. We’re not in the euro, we’re not joining the euro so we
shouldn’t be bailing out the euro,” he said.

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