2016 hasn’t started with the kind of news that would get George Osborne leaping out of bed in the morning. China has opened the year with a series of torrid days in the stock market, closing 10% down from the end of 2015. That, in turn, hit the world markets, which in turn did nothing to assuage the ongoing fears in the European markets. All in all, it’s been an inauspicious start to the year, and now Mr. Osborne is warning that 2016 is likely to be one of the toughest since the financial crisis first took hold, telling business leaders that we’re still a long way from “mission accomplished” in regards to economy, but rather, this year is “mission critical”.
The message comes in contrast to his autumn statement and speech at the party conference, both of which were presented as positive in tone, with the former describing the economy as “growing fast”. At the time of that autumn statement, Mr. Osborne said that it was a four year plan to restore the UK’s public finances, make businesses more competitive and the economy more productive in order to create jobs and wealth.
In an interview with the Today programme on Radio 4, Mr. Osborne said: “It is precisely because we live in an uncertain world. It is precisely because we have not abolished boom and bust as a nation, that you need to take these steps, difficult steps, and I need to go explaining to the public, that the difficult times aren't over, we have got to go on making the difficult decisions, precisely so that Britain can continue to enjoy the low unemployment and the rising wages that we see at the moment”
Now, he’s spoken of a “dangerous cocktail of new threats”, including the pace of China’s falling currency (currently at its lowest level in nearly five years), asset bubbles in the UK economy and falling commodity prices all threaten the future stability of the United Kingdom. Part of this fresh recovery warning is to stop a so called “creeping complacency” which the chancellor suggests has made its way back into the public’s psyche since the end of the recession.
"All the old habits, all the old habits, all the old bad ways that got Britain into that mess are re-emerging in some of our national debate and I need to remind people that it's a very challenging world out there, that Britain still has big economic problems that it has to fix," Mr. Osborne said.
The shadow chancellor John McDonnell used Osborne’s comments to attack, saying that it was the government’s “failed economic policies” that created the threats to the economy. "It's a cocktail of his own mixture - failing to invest, failing to rebalance the economy, relying upon consumer debt to boost the economy for an election victory and now we're facing our own lethal cocktail within our own economy.
He's getting his excuses in early for the problems that he's caused that will now unfortunately hit upon many families across the country, especially if interest rates are increased during the year."