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Chancellor: Choppy recovery prognosis is right

Chancellor: Choppy recovery prognosis is right

Category: Economy

Updated: 17/08/2010
First Published: 17/08/2010

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The Chancellor of the Exchequer has said that he agrees with the Mervyn King's prediction that the economic recovery will be a choppy one.

Speaking to an invited audience at Bloomberg in London, George Osborne said that the British people could start to be cautiously optimistic about the economic situation, but warned that there was still much to do.

He pointed out the strong second quarter growth of 1.1%, much of which was driven by the private sector, as well as employment growing at the fastest pace for over a decade, and a pick up in manufacturing and exports.

"But of course, we must remain cautious," he said, citing persistently high inflation, the availability of credit lines to businesses and the highest budget deficit in the G20.

Referencing the prognosis from the Governor of the Bank of England, he commented: "I agree with Mervyn King when he said last week that we are likely to face a choppy recovery."

The Chancellor used the speech, which looked ahead to the Government's Spending Review in the autumn, as an opportunity to attack the former administration's legacy.

At one point, he said of the budget deficit: "I don't think it is unreasonable to say this was the greatest failure of British economic policy-making in more than 30 years."

Denying the scale of the problem would be the surest way to disaster, he added, and would wreck the British economy.

The coalition Government has made a number of changes since being drafted into office in May, and Mr Osborne said he would make no apologies for setting a brisk pace since taking office.

He said that in 100 days, the new Government had:

  • Completed a review of in-year public spending and found over £6bn of savings;
  • Established the Office for Budget Responsibility to audit the state of the public finances and provide unbiased forecasts;
  • Set a fiscal mandate to eliminate the structural current deficit by the end of the parliament;
  • Delivered a Budget which proved to the world that Britain now has the will, the determination and the resolve to live within her means.

"Now, across government, we are working on the crucial next step that is the autumn's Spending Review," he stated.

As part of the effort to secure the recovery, the Government has been canvassing the opinion of the public, with over 100,000 ideas from British people being submitted to the internet.

Mr Osborne said that the public would shortly be asked to choose some of the best suggestions.

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