As Chinese markets plunge further...
Osborne warns of ‘dangerous cocktail’ in global economy
George Osborne has warned that the economy is facing a “dangerous cocktail of new threats” in what marks a stark shift in his optimistic outlook.
The chancellor told an audience in Wales that 2016 is likely to be the toughest year since the financial crisis. He pointed to the turmoil in financial markets to say that Britain must not fall victim to “creeping complacency” that it is immune from pressures in the global economy.
His comments come after a further fall in the Chinese stock markets overnight which saw trading suspended for a second time this week amid reports that the economy is weaker than previously thought. The oil price also dipped yesterday to its lowest level in 11 years. Since the start of the week $2 trillion have been wiped from global stock markets.
A report from the British Chambers of Commerce adds to the new year gloom by saying economic growth is at risk of slowing further and looks increasingly lop-sided. It reports that factory exports grew at their weakest pace since 2009 late last year.
The BCC says its quarterly survey of members – Britain’s largest regular private-sector sample of firms – points to potential trouble ahead and an economy too dependent on consumers and the housing market rather than exports.
To add to world pressures, North Korea has tested a hydrogen bomb and there is tension in the Middle East between Saudi Arabia and Iran. These add to the slowdown in former booming markets in Brazil and Russia.
Mr Osborne, speaking in Cardiff, said: “2016 is the year we can get down to work and make the lasting changes Britain so badly needs. This year, quite simply, the economy is mission critical.
“Last year was the worst for global growth since the crash and this year opens with a dangerous cocktail of new threats. For Britain, the only antidote to that is confronting complacency and sticking to the course we’ve charted.”
He defended the UK government’s record and strategy which is “delivering growth, high employment, and rising wages” adding: “But as we start 2016, I worry about a creeping complacency in the national debate about our economy. A sense that the hard work at home is complete and that we’re immune from the risks abroad.”
Brent crude dropped by 5% to $34.60 a barrel. Shares in London fell for the second session this week