British Finance Minister George Osborne speaks at a joint news conference with French Finance Minister Michel Sapin and U.S. Secretary of the Treasury Jack Lew following their participation in a United Nations Security Council meeting to approve a resolution to cut funding for Islamic State at U.N. headquarters in New York, December 17, 2015. REUTERS / Mike Segar
By David Milliken
LONDON (Reuters) – Finance minister George Osborne said on Thursday that Britain’s economy was not immune from a “dangerous cocktail” of threats from abroad, and urged against complacency after two years of solid growth.
Osborne — whom Prime Minister David Cameron has named as a possible successor — said in a new year’s message that Britain faced headwinds from slower growth in China, Brazil and Russia as well as tensions in the Middle East.
“The economy has slipped down the list of many people’s everyday concerns. But the biggest risk is that people think that it’s ‘job done’,” Osborne said.
Britain has been the fastest growing of its peers for the past couple of years, but Cameron and Osborne regularly focus on the danger of economic mismanagement. Cameron spoke of “red warning lights” from the world economy in late 2014.
Since becoming finance minister in 2010, Osborne has made reducing Britain’s large budget deficit his priority, and more than halved it to just under 5 percent of gross domestic product during his first five years in office.
In the run-up to May 2015’s national election, Osborne said he wanted Britain to run a budget surplus in normal economic times, a goal the opposition Labour Party and many economists think is too stringent and risks hurting growth.
Public borrowing during the current financial year has come in above forecasts, raising doubts about whether Osborne will meet his most immediate fiscal goals.
Business surveys have also suggested the outlook for economic growth is darker than thought a few months ago. The British Chambers of Commerce said on Thursday that manufacturing exports had stagnated for the first time since 2009.
“This year opens with a dangerous cocktail of new threats,” Osborne said. “We are only seven days into the New Year, and already we’ve had worrying news about stock market falls around the world, the slowdown in China (and) deep problems in Brazil and in Russia.”
While a big fall in oil prices was good for most British consumers and businesses, it would hurt oil and gas output and investors who had lent to the sector, he said. Tensions between Saudi Arabia and Iran were also a worry.
Osborne made no mention of the referendum on European Union membership which Cameron has promised to hold before the end of 2017 but which many analysts expect to take place as early as June. They warn it could cause businesses to delay investment.
(Reporting by David Milliken; Editing by Ruth Pitchford)
