Cameron paints dire picture of global economy

UK prime minister David Cameron has said "Red warning lights" were flashing once again over the state of the global economy, the BBC reported.

According to Cameron, weak growth in Europe, a slowdown in Asia and conflicts around the world had created a "dangerous backdrop of instability".

Chancellor George Osborne said though the UK was outperforming many other economies, it was vital the government was not "diverted" from its long-term goals.

According to Labour, the UK's economic recovery was still not being felt at home.

In an article in The Guardian, Cameron, after returning from the G20 summit in Australia, said "red warning lights are once again flashing on the dashboard of the global economy" - six years on from the crash that "brought the world to its knees".

He said, "The eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too.

"Emerging markets, which were the driver of growth in the early stages of the recovery, are now slowing down."

He added, the Ebola epidemic, conflict in the Middle East and Russia's illegal actions in Ukraine were all adding to a "dangerous backdrop of instability and uncertainty".

Cameron wrote that there was now ''a dangerous backdrop of instability and uncertainty'' that presented a real risk to the UK recovery. He added that the eurozone slowdown was already having an impact on British exports and manufacturing.

The warning follows only days after the Bank of England governor, Mark Carney, claimed a spectre of stagnation was haunting Europe, The Guardian reported. The International Monetary Fund managing director, Christine Lagarde, expressed fears in Brisbane had cautioned that a diet of high debt, low growth and unemployment may yet become ''the new normal in Europe''.

Cameron had adopted the more sombre tone in the runup to the chancellor's autumn statement on 3 December, when the Office of Budget Responsibility would come out with new growth projections and spell out the impact on public finances.

Meanwhile, a European Central Bank (ECB) survey showed that inflation would remain at worryingly low levels with a slight pick up expected next year.

The annual inflation rate in the eurozone stood near a five-year low of 0.4 per cent in October and the ECB expected a rate of 0.5 per cent for 2014 – well below the target of close to 2 per cent.