British finance minister warns of 'turmoil'

30th January 2011, Comments 0 comments

British finance minister George Osborne insisted Sunday he would resist pressure to drop his deficit reduction plan, saying to abandon it would unleash "financial turmoil" within minutes.

Osborne said he did not like having to raise taxes and slash spending, but said the measures were necessary to give Britain financial stability as he bids to rein in the massive budget deficit and pay off the country's debts.

Speaking from the World Economic Forum gathering of the global business and political elite taking place in Davos, Switzerland, the chancellor of the Exchequer made the comments to BBC television.

"If on Monday I went to parliament and got up in the dispatch box in the House of Commons and said I am abandoning the deficit reduction plan that Britain set out last year, what do you think the reaction would be?", he said.

"Within minutes Britain would be in financial turmoil. I am not prepared to let that happen.

"It requires tough, difficult decisions. No politician likes cutting spending and increasing people's taxes, but I was delivered a mess by the previous government and I am trying to clear it up."

Last week figures showed Britain's economy shrank by a shock 0.5 percent in the fourth quarter of 2010, dashing expectations for growth, as, according to the chancellor, freezing weather sparked the first contraction since 2009.

Gross domestic product fell 0.5 percent in the three months to December, after expansion of 0.7 percent in the third quarter, the Office for National Statistics said in its initial estimate.

Protests against the cuts package took place in London and Manchester on Saturday, with 20 arrests in Manchester as a breakaway group roamed through the northwest English city.

Opposition Labour finance spokesman Ed Balls on Sunday criticised Osborne's plan to clear the deficit by 2015, claiming there was an "economically more credible alternative".

"When I hear George Osborne refuse even to countenance the idea of a plan B, I can see no economic judgment at work at all -- just a political gamble with the nation's economy.

"Supporting job creation, reforming our financial systems and investing in jobs for the future is the best way to get economies moving again and to cut the deficit."

© 2011 AFP

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