Chancellor of the Exchequer George Osborne will say a “dangerous cocktail” of global threats faces the British economy this year as he warns that complacency is starting to take hold.
In a speech in Wales on Thursday, Osborne is set to identify the slowing economies of China, Brazil and Russia, the slide in commodity prices and escalating political tensions in the Middle East as potential hazards.
“‘Anyone who thinks it’s mission accomplished with the British economy is making a grave mistake,” he’ll tell business leaders in Cardiff, according to extracts of his speech released by the Treasury. “2016 is the year we can get down to work and make the lasting changes Britain so badly needs, or it’ll be the year we look back at as the beginning of the decline. This year, quite simply, the economy is mission-critical.”
Osborne begins the new year amid signs that the U.K. economy is losing momentum with exports stagnating and domestic demand — the engine of growth since the financial crisis — starting to yield to the prospect of years more of austerity. Added to that is the risk of a British exit from the European Union in the referendum Prime Minister David Cameron has hinted could be held this year:Confidence among U.K. services firms slid to a three-year low last month.
Global growth estimated last year by the International Monetary Fund to be the slowest since 2009 could be much the same in 2016 if problems in emerging markets persist or market volatility continues, Osborne is set to warn.
Amid criticism of his budget-cutting plans from the opposition Labour Party, the chancellor will defend his goal of turning a 90 billion-pound ($132 billion) deficit in the latest fiscal year into a surplus by the end of the decade.
“The British economy has performed better than almost anyone dared to hope, and as an issue the economy has slipped down the list of many people’s everyday concerns,” Osborne will say. “But the biggest risk is that people think that it’s ‘job done.’ Many in our politics encourage this, irresponsibly suggesting that we can just go back to the bad old ways and spend beyond our means for ever more.”