LONDON: British Finance Minister George Osborne will on Monday (Tuesday in Manila) insist that recent economic data has vindicated his austerity measures and warn that any backtracking could jeopardize the recovery.
Britain’s gross domestic product (GDP) grew by 0.7 percent in the second quarter or three months to the end of June, upwardly revised data showed last month.
In a speech to be delivered later Monday, Osborne will claim that the accelerating recovery justified his measures of “fiscal responsibility and monetary activism,” despite generally disappointing GDP figures since the government was formed in 2010.
According to extracts of the speech released by the finance ministry, Osborne will reject accusations that fiscal tightening has caused GDP stagnation.
He will instead blame “external inflation shocks, the eurozone crisis and the ongoing impact of the financial crisis on financial conditions.”
The spike in GDP over the last six months, despite ongoing austerity, is proof that the two were not directly linked, he will argue.
“Those in favor of a Plan B have lost the argument,” said the text of his speech.
“Amazingly, even with the evidence we now have, there are still those calling for the government to abandon its economic plan in order to spend and borrow more,” it added.
“But to do so would be disastrous,” he will argue, before warning that “years of hard decisions lie ahead.”
Osborne will also reject criticism that the recovery was unbalanced and based on the type of credit bubble that caused the crisis in the first place.
The minister will point to expansion in the manufacturing and service sectors, modest consumer spending, increased exports and a fall in private debt as evidence of a “broad-based and sustainable” recovery.