UK chancellor warns of more spending cuts

UK Chancellor of the Exchequer George Osborne says the Tory government may make more spending cuts as the latest data show Britain’s economic recovery is not as advanced as expected.

Osborne said he may consider cuts in public spending in his annual budget on March 16 after seeking further “efficiencies” in government departments.

The possible cuts are seen as a setback for Osborne who has already been under fire for the Tory government’s controversial austerity measures. They may also deal a major blow to his plans for succeeding David Cameron as prime minister when his tenure ends in 2020.

The chancellor made the remarks in an interview with the BBC in Shanghai, where he is attending a meeting of Group of 20 finance ministers and central-bank heads.

 “The storm clouds are clearly gathering in the world economy and that has a consequence for lots of countries including Britain. Now, we are weathering it better than most but we’ve just had confirmation that our own economy is not as big as we had hoped… We may need to undertake further reductions in spending because this country can only afford what it can afford,” he noted.

“We’ll set it out if we need to how we’ll reduce spending, but the first place I look to is further efficiencies in government,…There are always ways to make government better, always ways to make sure that the taxes of people are better spent,” he reiterated.

The spending cuts also put the chancellor at odds with the G-20’s promise to use fiscal policy flexibly to support growth.

Figures published by the British Office for National Statistics revealed that the country’s economy expanded by 0.5 percent in the fourth quarter of 2015 but exports declined for the second straight three-month period and business investment fell the most in almost two years.

“We’ve got an economic plan that says we spend what we can afford as a nation and so we are going to have to look at public expenditure again…We’ll do that in the budget because I’m absolutely determined that first and foremost in this uncertain time we have economic security. That’s what people rely on,” Osborne said.

The Treasury has already been planning steep reductions in public spending. Osborne’s critics argue that cuts reduce growth in the short term.

“Far from paying our way, Osborne’s short-term economics means Britain is deeper and deeper in hock to the rest of the world,… If the Bankers' Chancellor had been doing his job properly he would be collecting taxes from Google and other tax-dodgers. Instead he is threatening the British people with paying an even higher price for his own failures,…” John McDonnell, Labour’s shadow Chancellor was quoted as saying by the Independent.

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