Stubborn PM pushes on with cuts agenda

The Prime Minister defended the coalition's mad economic policy it began following the 2010 general election and vowed to "hold firm to the path we have set."

He denied that he was being stubborn, arguing that "there are signs that our plan is beginning to work" and echoing former Tory prime minister Margaret Thatcher's mantra that "there is no alternative" to secure Britain's future.

But his comments were at odds with Business Secretary Vince Cable who suggested it was time for a rethink.

Unite general secretary Len McCluskey said Mr Cameron was living in an "economic cloud-cuckoo land."

He said: "This speech was a textbook lesson in complacency and incompetence that flew in the face of the everyday reality that working people are experiencing."

Mr McCluskey said the PM should have apologised for losing Britain's AAA credit rating.

"This was his government's own test of competence and it failed. He ought to have stood before the nation today and apologised, but instead he stubbornly refuses to shake the austerity addiction."

Mr McCluskey called for an immediate £1-an-hour increase in the national minimum wage from the current rate of £6.19 in order to put money back in the wallets of some of Britain's lowest paid.

During the address in West Yorkshire the premier said that the downgrading of Britain's AAA credit rating had been "the starkest possible reminder" of the country's debt problem.

He warned a failure to deal with it will see interest rates rise, homes repossessed and businesses going bust.

And he dismissed calls for borrowing and spending more, arguing there was no "magic money tree" that allowed the government to do so.

TUC general secretary Frances O'Grady said Mr Cameron "has some cheek" to claim the government's economic policies are working.

She said: "We have a jobs, growth and living standards crisis. Fixing that is the way to reduce debt, not the economic equivalent of self-harm."

The TUC will publish new research next week showing how much poorer households will be by 2015 as a result of the goverment's economic austerity policies.