George Osborne warns of more cuts as economy falters

Chancellor of the Exchequer George Osborne. Picture: AP
Chancellor of the Exchequer George Osborne. Picture: AP
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George Osborne has warned he is poised to unleash a fresh wave of spending cuts in next month’s Budget.

Britain’s stuttering economy combined with the turbulent international backdrop mean “further reductions” may be necessary, the Chancellor said.

Official figures on Thursday revealed sluggish growth in the last three months of 2015 of just 0.5 per cent.

Any public spending cuts are likely to have knock-on effect in Scotland under the Barnett Forumula.

Mr Osborne, who is in Shanghai for a meeting of G20 finance ministers, said: “The storm clouds are clearly gathering in the world economy and that has a consequence for lots of countries, including Britain.

“Now, we are weathering it better than most but we’ve just had confirmation that our own economy is not as big as we had hoped.

“So we may need to undertake further reductions in spending because this country can only afford what it can afford and we will address that in the Budget, because I’m absolutely clear we’ve got to root our county in the principle that we must live within our means.

“We’ve just had new figures that show the economy is smaller than we thought in Britain, and we also know that global risks are growing and Britain is not immune to those things.

“Britain is still doing better than most countries but that’s because we’ve got an economic plan that says we spend what we can afford as a nation and so we are going to have to look at public expenditure again.

“We’ll do that in the Budget because I’m absolutely determined that first and foremost in this uncertain time we have economic security. That’s what people rely on.

“We’ve taken judgments to get that budget surplus and now of course as the global economy gets more difficult – and I think everyone accepts that things have got more difficult since the start of the year as more information comes in – we make sure that . . . Britain lives within its means, Britain can only spend what it can afford.”

“But people should know this of me, I will do what is required to keep our country safe and secure because in the end that is what people’s livelihoods and jobs rely on.”

The Government must run a surplus in “normal” times from 2019 under tough rules set by Mr Osborne.

Earlier this month the Institute for Fiscal Studies (IFS) warned that the target could lead to “big tax rises or spending cuts with very little notice”.

The Chancellor said he would task government departments with finding more “efficiencies” first as he looks to finalise the March budget.

“We’ll set it out if we need to, how we’ll reduce spending, but the first place I look to is further efficiencies in government,” he said.