LONDON (MNI) – UK Chancellor of the Exchequer George Osborne has
dismissed warnings that the British economy is too weak to withstand the
government’s deficit reduction plan in its current form.
In an interview with the BBC’s Today program, Osborne said that
tighter fiscal policy will give the Bank of England more room to
maneuver on monetary policy.
Osborne has been forced to defend his strategy after more than 50
left-leaning economists said that the pace of deficit reduction risked
choking-off the recovery.
“There is flexibility built into the plan that I announced a year
ago…We of course have an independent Monetary Policy Committee and, of
course, tighter fiscal policy gives the Monetary Policy committee
greater freedom to operate monetary policy,” he said.
Osborne also said that automatic stabilisers, including increased
more benefit spending, would kick in if the economy hit bumps on the
road to closing its fiscal deficit.
“We’re talking about the structural deficit, so in other words, we
allow the automatic stabilisers to operate which means that the economy
can move up and down with the cycle and government spending can move up
and down with the cycle,”
Monday’s press saw top economists leap to the defence of the
Coalition’s austerity plans, the Daily Telegraph said. The supportive
economists argued that abandoning the fiscal plan now would lead to even
greater economic damage.
–London Bureau; Tel: +442078627492; email: ukeditorial@marketnews.com
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