The Prime Minister has issued a stark warning that the world could be heading for a second economic crash because of “a dangerous backdrop of instability” fuelled by conflicts, Ebola and stalled trade talks.
Writing in the Guardian after the G20 summit, David Cameron said “red warning lights are once again flashing on the dashboard of the global economy” in a similar way before the global recession six years ago.
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 market economies, which were the driver of growth in the early stages of the recovery, are now slowing down.
“Despite the progress in Bali [trade talks in 2013], global trade talks have stalled while the epidemic of Ebola, conflict in the Middle East and Russia’s illegal actions in Ukraine are all adding a dangerous backdrop of instability and uncertainty.”
Mr Cameron warned Britain’s economic recovery posed a “real risk” from the wider problems in the global economy.
“We cannot insulate ourselves completely but we must do all we can to protect ourselves from a global downturn,” he said.
Growth of the British economy slowed in the third quarter of this year, with gross domestic product rising 0.7% between July and September from output in the previous three months.
The economy had expanded by 0.9% during the second quarter, and by 0.7% in the first quarter.
But despite the slowdown, the British economy still looks more dynamic than the eurozone, where growth is sluggish and deflation threatens.
According to the European Commission’s autumn economic forecast, output in Britain will grow by about 3.1% this year, higher than a previous prediction of 2.7%, then 2.7% in 2015 and 2.5% in 2016.
That contrasts with 0.8% for the 18-country eurozone, which is lower than a previous prediction of 1.2%.
The Bank of England last week trimmed its forecast for growth, citing economic strains in the eurozone.
It forecast that GDP would expand 2.9% next year, down from a previous estimate of 3.0%.
The Bank of England still expects expansion of 3.5% this year.