LONDON – Britain’s Treasury chief warned Thursday of a “dangerous cocktail” of new threats to the economy, insisting that the country’s robust growth is not immune to troubles from abroad.
A sombre George Osborne used a speech in Wales to underscore his fears about what he described as “creeping complacency” in the debate about the national economy, which has been one of the best-performing in the developed world in recent years. His mood was far from the buoyant assessment offered in November, and he rejected the idea of abandoning his government’s plan of spending cuts.
Osborne cited the slowdown in China as well as a drop in global stock markets and commodity prices among the key concerns. Britain had about 10 billion pounds ($14.6 billion) in capital investment in the offshore oil and gas industry in 2015, making it vulnerable to a world in which oil prices have fallen to below $35 a barrel earlier this week, down from $120 a barrel in 2012.
“Last year was the worst for global growth since the crash and this year opens with a dangerous cocktail of new threats from around the world,” Osborne said. “For Britain, the only antidote to that is confronting complacency and delivering the plan we’ve set out.”
Britain’s economy has expanded for 11 quarters in a row. It grew by 0.4 per cent in the third quarter compared with the previous three-month period.
But in his remarks, Osborne expressed concern that the economy might fall down on the list of everyday concerns in Britain. Osborne’s remarks seemed aimed at lowering expectations that austerity plans might be relaxed any time soon — and warning that the spending ideas of opposition Labour Party would be disastrous.
“Anyone who thinks it’s mission accomplished with the British economy is making a grave mistake,” he said.
As if to underscore the potential for trouble, the pound hit a 5 1/2 year low to the dollar, trading at $1.455.
“The pound has weakened as expectations of a Bank of England interest rate hike any time soon have waned and there has also been a mounting market focus on the U.K.’s referendum on EU membership,” said Howard Archer, the chief U.K. and European economist for IHS Global Insight.