Osborne says growth alone won't fix British deficit

Tue Oct 22, 2013 8:43am EDT
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By David Milliken and William James

LONDON (Reuters) - Britain's finance minister vowed to stick to the path of austerity, saying economic recovery on its own would not be enough to fix the budget deficit and the causes of over-spending still needed to be addressed.

George Osborne, speaking at a Thomson Reuters Newsmaker event on Tuesday, also said he was "a couple of weeks" away from deciding whether to split up state-owned Royal Bank of Scotland and rejected criticism that the government sold Royal Mail too cheaply.

Osborne claimed some credit for Britain's long-awaited economic recovery, saying it was being helped by his refusal to budge from his austerity plan despite widespread criticism, including from the International Monetary Fund.

"I think we already see the benefits in the UK of having a clear economic plan and sticking to that economic plan," he said.

Figures released earlier on Tuesday showed Britain's public finances improved in September, helped by higher tax revenues. And on Friday more data is expected to show Britain's economic growth reached its fastest pace in three years between July and September.

Osborne warned that growth alone would not fix the fundamental problems in Britain's public finances and the government would have to take "very difficult decisions".

"An improving economic situation in the UK does not automatically lead to a windfall for the public finances because we shouldn't assume that a structural deficit is solved by an improvement in GDP," Osborne said.

"It's called a structural deficit for a reason," he said.   Continued...

Britain's Chancellor of the Exchequer George Osborne speaks at a Thomson Reuters Newsmaker event at Canary Wharf in London October 22, 2013. REUTERS/Toby Melville