Cameron: 2012 a difficult year
David Cameron has warned of another "testing year" ahead for British households.
The Prime Minister said he hoped inflation would fall this year to ease the pressure and insisted there were positive signs on private sector employment and exports. But he also acknowledged the difficulties that remained.
"Looking into 2012, one of the trends I hope to see happen is a fall in the level of inflation, so households feel under less pressure than they did in 2011," he told BBC Radio 4's Today programme.
"But undoubtedly - I don't want to pull the wool over people's eyes - it's a difficult year, it's a testing year, but I think we need to meet these challenges with the sense that we can overcome them."
Mr Cameron acknowledged that the Government's attempts to rebalance the economy away from its reliance on public sector spending and financial services was not going as quickly as he had hoped.
"What we need to have in Britain is a rebalancing of the economy, away from Government spending, excessive borrowing, financial services and consumption and towards business investment, export, manufacturing, making things again, right across the country," he said.
"There is a rebalancing taking place, but it's not going as fast as we'd like it to, we need to do better on that front."
Mr Cameron said he was "not satisfied" with the level of bankers' bonuses, saying they were "completely out of whack". But he said there had already been "a massive reduction" in bonus levels compared with three or four years ago.
He indicated that further measures to curb bonuses in the City would be unveiled within days.
He also said the Government would be introducing greater transparency about remuneration and increasing shareholders' power to restrict pay.