Chancellor - next week's Budget: rescue to reform - Business Works
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Chancellor - next week's Budget: rescue to reform

C hancellor of the Exchequer, George Osborne speaking on the launch of the Organisation for Economic Cooperation and Development’s (OECD) analysis of the UK situation, delivered by Mr Angel Gurria, Secretary-General of OECD:


Every two years the OECD conducts in-depth analysis of the main economic challenges and policy options facing individual member countries. Their verdict is influential in policy and political circles around the world.

In exactly a week’s time, I will deliver the Budget. The Budget will echo what I see as the central message of this OECD report: this Government has set the right course for the British economy, but we have so much more to do.

Last year’s Emergency Budget was a rescue mission, bringing us back from the brink of fiscal disaster and we will stick to the course we set out.

The mission of this year’s Budget will be to move from rescue to reform. Because, if we want Britain to succeed in the new global economy, if we want to create the high quality jobs of the future, then we need to overcome some of the deep-rooted and long-standing weaknesses of our economy that are spelt out in this independent report.

For too long governments have shied away from the difficult choices and trade-offs that are required. We will confront these choices head-on.

We have already made a strong start, with reform of education, welfare and energy; new investment in science; and setting out a clear path towards a more competitive tax system.

Next week’s Budget will mark the next phase of our plan for growth. The foundation of that plan must be fiscal responsibility.

I strongly welcome the OECD’s support for the principle at the heart of this Government’s economic policy: that a credible plan to deal with our record budget deficit is an absolute pre-condition for sustainable economic growth.

As today’s report says, our deficit reduction plan has "significantly reduced fiscal risks, contributing to lower bond yield spreads and diminished uncertainty".

On the question of the scale and pace of deficit reduction, the OECD is clear: "the announcement and initial implementation of the consolidation programme strikes the right balance between addressing fiscal sustainability ... and preserving short-term growth".

We need a new more sustainable model of economic growth. As I’ve said, we need to be realistic about where we are coming from and optimistic about our future. We share with the OECD an understanding of what went wrong in the British economy over the last decade. Britain became in many ways the most indebted and unbalanced major economy in the world.

We need to build a new model which is more balanced and sustainable. That new model of growth is already starting to be created. As today’s report says, "the UK economy is gradually emerging from the recession and has started to rebalance away from over-reliance on debt–finance and government spending towards more investment and exports."

Exports to the rest of the world are growing strongly and our manufacturing sector is expanding at the fastest rate in 16 years.

Today’s labour market statistics confirm, as was forecast, a disappointing rise in unemployment on the ILO measure, but they also provide more positive evidence of rebalancing.

  • 430,000 new private sector jobs have been created in the last year
  • More than 70,000 private sector jobs created over the last three months of 2010 alone, exceeding the 45,000 jobs lost in the public sector over the period
  • At the same time the claimant count has fallen and employment is up

But to sustain the transformation to this new model of sustainable economic growth we will need to address the deep rooted problems identified by the OECD. In the past, Governments have chosen to ignore their advice.

We will be as determined in our pursuit of economic reform as we have been in our pursuit of economic stability. We will take action – starting in next week’s Budget when we move from rescue to reform.


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