2014 Britain's 'year of hard truths'

DANICA KIRKA
Last updated 09:00 07/01/2014

Relevant offers

World

Investigation exposes shocking exploitation of convenience store workers While market panicked, this day trader made NZ$52 million Former franchisee alerted Subway exec about Fogle - laywer Woolworths profit slips, Ralph Waters steps down as chair Amazon may be a bad place to work but it's a great investment Walmart to stop selling some semi-automatic rifles US stocks snap losing streak, oil declines Burger King 'seeks truce' with McDonald's, calls for McWhopper Obama to John Key: 'Don't call me Mr President' Asian stocks meander after China rate cut; Shanghai declines

Britain's Treasury chief offered a dampened view of the economy on Monday, warning that substantial savings must be gleaned from welfare cuts if the country is to eliminate the deficit.

The British economy has been enjoying a stronger recovery than most European countries, but George Osborne noted there are still big underlying problems.

He said 2014 is to be the "year of hard truths" and that the country faces a choice.

"Do we say: 'the worst is over; back we go to our bad habits of borrowing and spending and living beyond our means - and let the next generation pay the bill'?" he said.

Osborne told workers at a Birmingham company that supplies auto components that billions of pounds in welfare cuts will be needed to reduce the deficit, which was swollen by the economic crisis.

The government deficit dropped to 5.2 per cent of gross domestic product (GDP) in the 2012-2013 fiscal year, from 7.6 per cent in the previous one.

His sober message comes in stark contrast to the recent news on Britain's economy.

Though the recovery from the 2008-2009 recession hasn't been electrifying, Britain is doing better than most other major economies around the world.

Its quarterly growth rate of 0.8 per cent in the third quarter is better than Germany's 0.3 per cent and the overall European Union's 0.2 per cent.

At the same time, unemployment has dropped to 7.4 per cent, its lowest rate in 4 years, and inflation has dropped to 2.1 per cent, just slightly ahead of the Bank of England's 2 per cent target.

Ad Feedback

- AP

Special offers

Featured Promotions

Sponsored Content