George Osborne, the chancellor of the exchequer, does not believe that the continued uncertainty surrounding Britain ‘s EU membership is damaging the level of investment that is coming to the UK. In an interview with CNBC following the World Economic Forum last week, he said that Britain continues to be an attractive place for investors.
“I don’t think uncertainty about future EU membership is harming the UK economy, because the most recent numbers this week show we’re creating jobs and employment is at a record high and we’re getting a lot of investment. Do I think getting this relationship right for Britain, with the European Union, is important to our economic future? Yes I do, and what the Prime Minister was saying, and what we’re saying as a government, is let’s reform that relationship, let’s allow the Eurozone to pursue, if they want, that ever greater political union. Britain doesn’t want to be part of it, but within a reformed EU and with proper protections for countries like Britain that aren’t in the Euro, we can have that European Union.”
He went on to say that it is important for the UK to make sure that it has the right form of relationship with the European Union and that the idea of ever closer union is not one that he believes is right for the country and its economic future.
“We’ve got to get this question right, we’ve got to get the reforms right, you know, our argument is reform the European Union, make sure that Britain is more comfortable inside the European Union by protecting, as I say, countries without the Euro, making sure we’re not we’re not part of ever-closer union, making sure we don’t have welfare tourism, achieve those sorts of things and make Europe itself more competitive, and then it will be actually a big boost to investment, and that’s exactly what the negotiation is all about at the moment.”
The chancellor then spoke about whether or not he felt that market analysts were correct to downgrade their forecasts for UK economic growth. He said that the UK ‘s economy was in a particularly strong position and that this had even been recognised by the International Monetary Fund in recent times. However he did say that the world economy was currently in a dangerous position and that this prevented a risk to countries that were as “open” as the United Kingdom.
“The IMF had their latest forecast this week, and they did downgrade the world economy, but they didn’t downgrade the UK, and they kept the UK forecasts where they are, and along with the United States, we’re set to be one of the fastest growing of the advanced economies, but clearly we’re a big, open trading nation, we’re probably the most open of all of the big G7 economies, and so you do look with some concern at what’s going on in global markets, and it does present something of a dangerous cocktail out there.”
He said that he felt that he had the “answers” to these problems and that a combination of a well managed economy back home, coupled with precautions on the world stage could shelter Britain from the worst of the apparently brewing storm.
“I think there are answers, I mean, first of all, in countries like the United Kingdom, we’ve got to go on making the reforms we’re making, sort out our public finances, make ourselves more competitive, invest in the long term infrastructure of the country and the like, and then I think internationally we need a bit of a sense of perspective which is, you know, underlying all this volatility are some transformations and transitions which are fundamentally good for the world. China becoming a more consumption-based economy. Energy being cheaper with new supplies, whether it’s Iran or shale oil. In the European Union and in the Eurozone, we hear today, you know, the European Central Bank ready to do as central banks in Britain and America have done when economies are weak, and step in and support the Eurozone. So you know, I think it’s quite important behind the volatility to look at what’s driving some of this volatility, and they’re fundamentally quite positive trends.”
He also said that it was important not to underplay the significant impact that the plunge in oil prices have been making on the markets worldwide.
“Because of the very sharp falls in the oil price, the markets are unstable. Obviously falling oil prices affect different countries and different companies in different ways, but fundamentally again for most western economies, and for most emerging economies, not all, a fall in the price of energy is a good thing, so you know, I think that’s, you know, this is of course an anxious time for investors, people see the stock markets moving around. I think the job of policy makers is to keep their eye on the ball, and their eye on, you know, what are the long term plans we need to implement, and that’s the way you can give confidence in periods of very short term volatility.”
He went on to point to the tech industry as one area where Britain has outperformed its European competitors but also said that it has taken too long for there to be a European tech giant such as the likes of Google or Apple.
“Britain, I think, is the go to place for tech in Europe. I mean, there are other good places like Berlin and Stockholm and so on, but I think London, with Tech City, has become a magnet for investment and Britain is the most online of all the western economies in terms of the way we do our shopping and the way we conduct our social lives and the like. So there’s a huge amount on offer in the UK.”
“The question why has there not been a big British, or indeed European, tech firm of the scale of Google and Apple and whatever, I mean, it’s a good question, although of course there have been leading Brits involved in building those firms, like Sir Jony Ive, and so on, I think it might be something to do with the fact that Europe’s not been able to create a digital single market. We’re working hard at trying to do that, frankly I think it’s all taken far too long, its’ far too slow, but if you could create that digital single market, you’d have 500 million-odd customers to sell into, so I think in the United States, the initial home market for some of these tech markets has been, of course, pretty substantial, and look, I don’t think it’s the only reason, I think the United States has had a more entrepreneurial economy than many European economies. Hopefully that’s changing in the UK, and we’re starting to make ourselves the go to, most competitive economy of all of the western economies.”