What's to stop people from using strong encryption on their own, illegally, end to end? It's not like this is the first time the government has inserted itself in between people's legitimate communications and intercepted them with no recourse. If you assume that that is the default state of being (and except for a few small governments, it is), then you realize that the short periods of time where people could communicate freely and privately using networks outside of private in-person meetings have been lapses in government surveillance more than anything else and minor moments of relief for those who want to communicate privately. Governments will spy. That is a given. They will try to remove privacy. That is a given. Regardless of any laws and especially when it's as simple and undetectable as making some database queries.
I'm not defending any government's actions to remove privacy and spy on its people. Quite the contrary, once one has accepted that as inevitable, it's easier to move on. The need for human privacy is also, IMO, a fact. Some may dispute that, yet there are true, the only other option then becomes to go around the law. An unjust law must be broken. And it will. The worse the government gets, the more it will be broken.
I don't see why people in the UK and elsewhere couldn't get copies of software that still had strong encryption despite the idiotic laws. After all, it's just as easy to click one link as another. Will the UK be monitoring traffic for actual binaries and source code? Will the arrest people that use encryption they can't break? Will they arrest people for sending garbage data that looks like encrypted data but isn't and therefore can't decrypt? As the government gets more totalitarian, I think we will see even regular people training themselves in encryption and its proper uses. It's inevitable as people have more and more to lose. Once life, limb, and property are at stake, people either become competent or become victims, and people are generally a lot more competent than they appear when high stakes are on the line.
Of course, UK companies will be hurt. They won't be able to do a lot of business internationally. UK citizens will have their information stolen in massive data breaches. Bank accounts and identities will be compromised. Many accounts that are not with UK companies will be compromised because of password reuse. Cameron doesn't have to ban ALL strong encryption. Whatever systems he bans it in, will be compromised. That's inevitable. At the same time, the people don't have to put up with it. Stop online banking with banks that don't use strong encryption. Request paper bills. Clog up phone lines. Pay in cash if possible. These are all things a regular person could do in the event that strong encryption is banned that if done by even a small percentage will increase costs quite a bit. It may not get the law reversed, but it might get companies on the side of people if they have to cut paper bills again at a 10-100x cost over electronic ones, for example.
tl;dr: Governments will spy and people will use strong encryption regardless of the law as privacy is a human right and oftentimes necessary to survival. Businesses and convenience will suffer greatly.