George Osborne: upturn still rules out tax cuts or increased spending
George Osborne,
centre, at the start of the annual IMF meeting in Washington. The
chancellor has ruled out tax cuts or increased spending for the UK
economy. Photograph: Jonathan Ernst/Reuters
George Osborne
has ruled out the possibility that Britain's improving economy will
lead to immediate tax cuts or spending increases when he said repairing
the public finances would be the priority of the autumn statement on 4
December.
Announcing the date of his half-yearly health check on the economy, the chancellor said that the UK was still borrowing too much and that any windfall from faster growth would be used to reduce the budget deficit and the national debt.
"I will provide a fiscal forecast on 4 December," the chancellor said while attending the annual meeting of the International Monetary Fund in Washington. "I would just remind everyone that I still sit down at the table at the G20 with one of the highest budget deficits. Britain still continues to have some very serious public finance challenges that need to be addressed.
"Although we've brought down the deficit by a third, it is still too high. And as we demonstrated with the proceeds of the recent disposal of the Lloyds shares, where we've got the resource available we've got to make sure that we are doing what we can to reduce our deficits and debts."
The IMF this week revised up its forecasts for UK growth in both 2013 and 2014, six months after its chief economist, Olivier Blanchard, warned Osborne that he was "playing with fire" with his austerity plan.
Asked if he felt vindicated following this week's upgrade, Osborne said: "The IMF position was always more nuanced than some in the IMF presented it as. We have a clear plan and we are sticking to that plan."
The chancellor said the plan – which involved sorting out the public finances and repairing the balance sheets of banks – was starting to bear fruit. "But I am far from thinking the job is done. There are a lot of risks out there in the world."
Although, with an election little more than 18 months away, many Conservative MPs would like the chancellor to provide some tax sweeteners, Osborne is adopting a cautious approach. The Treasury has yet to observe any pickup in tax receipts as a result of the faster growth seen since the spring. Borrowing this year is currently expected to be £120bn.
Osborne said the mood at the IMF's annual meeting was more positive than it had been. "The UK has been singled out as an example of the improvement and there is recognition that we have stuck to our economic plan."
The chancellor defended the government's Help to Buy scheme following the introduction this week of phase two that provides taxpayer backed guarantees for 95% mortgages on properties worth up to £600,000. He insisted that the scheme was designed to address a specific problem and that the Bank of England had the necessary tools to prevent a bubble developing.
"There was a lack of high loan-to-value mortgages that had been a feature of the UK mortgage market for many decades," the chancellor said. "We are fixing what has gone wrong in the financial system."
Osborne said the scheme was only available to people who could afford the mortgage payments but said it would help those who could pass "rigorous checks" to get on the housing ladder.
"I am the chancellor who gave the Bank of England powers to deal with potential bubbles should they arise and I am the last person to resile from keeping an eye these issues. But it [Help to Buy] is the right policy instrument to deal with a specific problem."
Unlike some central banks, the Bank of England does not have the power to insist that UK banks keep loan-to-value ratios below a certain level. Osborne said Threadneedle Street had not asked for this financial tool but that the Treasury and parliament would consider any request.
source: http://www.theguardian.com/politics/2013/oct/11/george-osborne-rules-out-tax-cuts-spending
Announcing the date of his half-yearly health check on the economy, the chancellor said that the UK was still borrowing too much and that any windfall from faster growth would be used to reduce the budget deficit and the national debt.
"I will provide a fiscal forecast on 4 December," the chancellor said while attending the annual meeting of the International Monetary Fund in Washington. "I would just remind everyone that I still sit down at the table at the G20 with one of the highest budget deficits. Britain still continues to have some very serious public finance challenges that need to be addressed.
"Although we've brought down the deficit by a third, it is still too high. And as we demonstrated with the proceeds of the recent disposal of the Lloyds shares, where we've got the resource available we've got to make sure that we are doing what we can to reduce our deficits and debts."
The IMF this week revised up its forecasts for UK growth in both 2013 and 2014, six months after its chief economist, Olivier Blanchard, warned Osborne that he was "playing with fire" with his austerity plan.
Asked if he felt vindicated following this week's upgrade, Osborne said: "The IMF position was always more nuanced than some in the IMF presented it as. We have a clear plan and we are sticking to that plan."
The chancellor said the plan – which involved sorting out the public finances and repairing the balance sheets of banks – was starting to bear fruit. "But I am far from thinking the job is done. There are a lot of risks out there in the world."
Although, with an election little more than 18 months away, many Conservative MPs would like the chancellor to provide some tax sweeteners, Osborne is adopting a cautious approach. The Treasury has yet to observe any pickup in tax receipts as a result of the faster growth seen since the spring. Borrowing this year is currently expected to be £120bn.
Osborne said the mood at the IMF's annual meeting was more positive than it had been. "The UK has been singled out as an example of the improvement and there is recognition that we have stuck to our economic plan."
The chancellor defended the government's Help to Buy scheme following the introduction this week of phase two that provides taxpayer backed guarantees for 95% mortgages on properties worth up to £600,000. He insisted that the scheme was designed to address a specific problem and that the Bank of England had the necessary tools to prevent a bubble developing.
"There was a lack of high loan-to-value mortgages that had been a feature of the UK mortgage market for many decades," the chancellor said. "We are fixing what has gone wrong in the financial system."
Osborne said the scheme was only available to people who could afford the mortgage payments but said it would help those who could pass "rigorous checks" to get on the housing ladder.
"I am the chancellor who gave the Bank of England powers to deal with potential bubbles should they arise and I am the last person to resile from keeping an eye these issues. But it [Help to Buy] is the right policy instrument to deal with a specific problem."
Unlike some central banks, the Bank of England does not have the power to insist that UK banks keep loan-to-value ratios below a certain level. Osborne said Threadneedle Street had not asked for this financial tool but that the Treasury and parliament would consider any request.
source: http://www.theguardian.com/politics/2013/oct/11/george-osborne-rules-out-tax-cuts-spending
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