Belfast Telegraph

Sunday 28 December 2014

UK on prosperity path, says Osborne

Chancellor George Osborne has warned that Labour's plans pose a threat to the UK's economic recovery.
Chancellor George Osborne has warned that Labour's plans pose a threat to the UK's economic recovery.

Labour's economic policy of increasing corporation tax, freezing energy prices and imposing more controls on labour markets is increasingly becoming the biggest risk to Britain's recovery, Chancellor George Osborne has claimed.

Mr Osborne told a business audience that the UK was now on the "path for prosperity", so long as it stuck to the Government's deficit reduction strategy and completed reform of the banking system.

While threats to international stability remain from issues like levels of public debt in the US and weaknesses in the European economies, the danger that Britain's recovery would be upset by the collapse of the euro now appears to have receded, said the Chancellor.

He told the Telegraph Festival of Business: "I think we are on the path for prosperity, I think we have got the fundamentals right. We have got an economic plan which is delivering what very many countries in the world would crave, which is certainty, stability and competitiveness. It is making this country a much more competitive place to do business.

"But we have to deliver that plan and there is still a lot to be done. There is a huge amount to be done to reduce the deficit. There is still a huge amount to be done to make sure our kids have the skills they need. There is still a huge amount to be done to make sure we are competitive vis-a-vis the rest of the world. We have got to stick to that plan.

"If there is a domestic risk to the recovery, it is this debate that has opened up which increasingly sees some people saying we should tax businesses more, we should impose more controls on labour markets, we should intervene to fix prices.

"I think that would send a disastrous signal to the rest of the world. I think it would be a catastrophe for the recovery and employment in this country.

"That is the risk increasingly to the British recovery and we have to overcome it."

Mr Osborne said that Labour's proposed freeze on energy prices would be "enormously damaging", as it would deter investment in the infrastructure needed to generate and supply power. Instead, the Government should be concentrating on boosting competition in the sector and assessing whether green levies on energy bills were effective and value for money, he said.

And he rejected the claim - made in Labour leader Ed Miliband's speech to his party conference in September - that the Government was leading Britain on a "race to the bottom" with measures to increase labour market flexibility, such as making it more difficult to take employers to an industrial tribunal over grievances at work.

"The UK, I think, is aware that we are in a world which is fiercely competitive, where other jurisdictions are doing what they can to attract business, investment and jobs," said the Chancellor. "We have to stay up with them.

"Some people portray that as a race to the bottom. I absolutely reject that. For me, it is a race to be a competitive place where people have great careers and living standards improve and jobs are created and there is no reason why Britain can't win that race."

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