Osborne: Solving eurozone crisis would be ‘biggest boost’ to UK economy

Chancellor says solution to crisis vital to UK national interest as he prepares to address Tory conference The chancellor, George Osborne, has said an effective resolution to the eurozone debt crisis would be the “single biggest boost” the UK economy could receive. Osborne, who is under increasing pressure to stimulate economic growth in the face of the Treasury’s repeatedly downgraded forecasts, said the government was prepared to help families and businesses struggling in the difficult economic climate “where we can”. He announced measures to freeze council tax for a further year, invest in mobile phone masts and support British science. But he warned that the government was “not awash with money” and would cut “no more and no less” than it said it was going to, ruling out further tax cuts for businesses beyond those he has already announced until Britain’s finances were back in shape. In his keynote speech to the Conservative party conference in Manchester, Osborne will call on Britons to show a “can-do attitude” and promise them that the country will overcome its problems. Asked what more he could do to help business and growth, the chancellor said the single biggest boost to the country’s recovery lay in Europe. He told the BBC Radio 4 Today programme: “It’s nothing I can announce, actually – it is the resolution of the euro crisis. “That single thing would do more to boost the British economy than any single thing else in the world at the moment. So it is a vital national interest … that we get the euro crisis resolved.” As eurozone finance ministers meet in Luxembourg on Monday, Osborne said they should agree to increase the size of their bailout fund. “[It] doesn’t matter how they do it, but they need to get more resources into it,” he added. He said they also needed to deal with their weak banks, which were “a real drag on growth across the European continent”, and make a swift decision – and “stick by that decision” – on how they will deal with the problems facing Greece. As he looked ahead to the G20 summit in Cannes in November, Osborne warned: “If we come out of that meeting with the eurozone crisis still unresolved going into the winter, going into Christmas, then I think that will be terrible not just for Britain, not just for Europe, but for the entire world economy. “This instability is really debilitating at a time when, frankly, we’ve got lots of other challenges as well.” He insisted the government was not sitting on the sidelines as he announced plans to extend the council tax freeze in England for a further year. The freeze in 2013, estimated to be worth to £1.50 a week for the average household, cost £800m and is in line with a Conservative manifesto commitment to freeze the tax for two years . The money has been found from underspending across Whitehall, and will also be made available to the devolved executives in Scotland and Wales to enable them to make similar offers to keep council tax down, Osborne said. Osborne said the government was keen to help in any way if spare money was found, telling Today: “It [the council tax freeze] is a way of saying that we can help you where we can. “These are very difficult times – we know utility bills are going up, the oil price is up around the world, we have got these enormous debts we have to pay off. But if we are able to find resources to help, we will help.” He faced down calls from the business sector to cut corporation tax to 15%. The coalition has already cut the main rate of corporation tax from 28% to 26%, and has pledged further reductions, to 23%, by 2015. But Simon Walker, the director general of the Institute of Directors, said this was “not enough” and argued that a 15% rate was a key measure that could “make the UK one of the most competitive advanced economies in the world by 2020-25″. Osborne said: “Of course the business community would like us to go even further, and I would like to go even further if I had the money. But I am not a believer in deficit-funded tax cuts … The tax reductions we make have to be part of a properly costed government programme that is also getting the deficit down. “I believe in lower taxes, I would like to have permanently lower taxes. I think permanently lower taxes do boost growth. But you can’t fund, when you have got a huge budget deficit, a permanently lower tax rate because you end up having to put the tax up next year as the international money markets swirl around you and say, ‘Hold on, how is Britain going to pay its debts?’.” Osborne is expected to announce additional support for the stalled project to build the new Mersey Gateway bridge between Runcorn and Widnes. He also said the cash for science would include help in developing commercial uses in computing for the ultra-thin material graphene, which won two University of Manchester scientists the Nobel physics prize after they discovered it in 2004. Around £150m will be spent on mobile phone networks to enable companies to connect 6 million people living in remote areas that currently have little or no signal, he added. Conservative conference 2011 Conservative conference George Osborne Economic policy Tax and spending Conservatives European debt crisis European banks Recession Economics Hélène Mulholland guardian.co.uk

Posted by on October 3, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.