The United Kingdom will avoid a recession as the government is managing its finances in the right way, Vince Cable, secretary of business and innovation said, referring to an economy coping with high inflation, rising unemployment and weak wage growth.
In an interview with Reuters in Singapore on Monday, Cable said the recent decision by European Union policymakers on Greece is a step in the right direction.
There is deep concern whether the bailout fund by European leaders can tap sufficient resources to help Greece and handle euro zone's festering debt crisis. The head of Europe's 440 billion euro bailout fund, Klaus Regling, is touring Asia for potential investors.
Euro zone leaders struck a deal with private banks and insurers for them to accept a 50 percent loss on their Greek government bonds to help lower Greece's debt burden and contain the euro zone crisis.
It is certainly an important step forward. The EU leaders, they have dealt with the key essentials, Cable said during an interview at the Singapore International Energy Week.
He said there had been a lot of progress and EU leaders had made very difficult policy choices. They now see light at the end of the tunnel.
Britain is under equal pressure to come up with measures to boost its economic growth, with the Bank of England warning of a possible slide back into recession.
In the UK, we certainly have short term growth issues, but we have no doubt of the direction we are headed, said Cable. We are working to reduce our deficit. We are working on strengthening our economy, rebalancing it.
Inflation in Britain hit a three-year high last month driven by soaring gas and electricity bills.
Cable told ITV News in London barely two weeks ago that the country's faltering economy could slip back into recession but government action to boost growth is likely to help avoid another downturn.
Of course, it can avoid (a recession), he said on Monday. It is absolutely crucial that we rebalance the global economy. What matters really is not the quarterly growth figures, but the medium, long-term outlook.
(Reporting By Manash Goswami; Editing by Kavita Chandran)