Post categories: Davos
Stephanie Flanders | 19:49 UK time, Friday, 28 January 2011
There are times when Davos feels like a trade fair for the world's economies, where leaders and ministers come to show off their wares. There were two countries on display here on Friday morning, each with a deficit of roughly 10 per cent of national income, each with a very different approach to bringing it down.
Exhibit A was the UK Prime Minister, David Cameron. In his speech in the main hall he said baldly that that getting rid of the spectre of government debt had to be job one. "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."
Then, minutes later, on the same stage, we had Exhibit B, the US Treasury Secretary, Tim Geithner. He has never publicly made any negative remarks about the UK's current budget strategy. But he made quite clear in a set-piece interview with Charlie Rose that he thought rapid cuts in the US would jeopardise - not only the country's economic growth, but its long-term fiscal health as well.
There wasn't any public debate between the two men. But you couldn't help noticing two pieces of news that arrived on the same day. The first was that the American economy grew at an annual rate of 3.2 per cent - or a quarterly rate of roughly 0.8 per cent - in the last 3 months of 2010. That compares with that shocking 0.5 per cent decline in the same period for the UK. The second bit of news was that a key measure of consumer confidence in the UK had suffered its largest decline in a single month since the depth of the recession in 1992.
The comparison between the two countries isn't very fair. As long as the dollar is the world's main reserve currency, everyone agrees that America can get away with a lot more borrowing than anyone else. But there were have been some prominent voices here voicing alarm about the UK.