Second Global Crash Is Looming, Warns Cameron

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.

Chancellor George Osborne added that Britain is "not immune" from troubles and turmoil around the world.

Ed Miliband claimed Mr Cameron's warning was an attempt to "get his excuses in early".

Citing the highest trade deficit in 25 years and stagnating productivity, the Labour leader said: "The Prime Minister's gone from saying that everything is fixed thanks to him, to everything is not fixed but it's nothing to do with him."

But during the gathering in the Commons, Mr Cameron said he was actually "happy to defend and take some credit for what is happening in the British economy".

Describing Mr Miliband's remarks as "extraordinary", the Prime Minister replied: "While there are problems in the world economy, you can see that Britain is outperforming other countries in the world, and the figures speak for themselves."

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%.

On Monday, Japan slipped into recession after its economy - the world's third-largest - contracted 1.6% between July and September.

Meanwhile, emerging economies like Brazil have seen growth stall - from 7.5% in 2010 to 2.3% in 2013.

The Brazilian government predicts growth of 0.9% this year, while the country's central bank offers a more modest prediction of 0.6%.

The Bank of England last week trimmed its forecast for growth in Britain, 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.

Shadow work and pensions secretary Rachel Reeves said: "Of course there are risks from Europe and around the world, but this does seem from David Cameron like getting his excuses in early ahead of the autumn statement and the general election next year.

"Instead of making excuses … he should be doing more to secure the economic recovery for ordinary families by, for example, increasing the minimum wage."