UK Economy: Osborne warns of global risks and complacency
UK Economy: George Osborne, UK chancellor, is expected to warn Thursday of a "dangerous cocktail" of global threats faces the British economy this year. He also will warn that complacency about the economy is starting to take hold.
In a speech in Wales today Osborne will identify the economic challenges facing China, Brazil and Russia, the plunge in commodity prices and rising political tensions in the Middle East as potential hazards.
The chancellor will tell business leaders in Cardiff according to extracts of his speech released by the Treasury:
Anyone who thinks it's mission accomplished with the British economy is making a grave mistake. 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.
The UK economy expanded by just 0.4% in the third quarter, from a previous estimate of 0.5%, according to revised figures published on 23 Dec, 2015 by the Office for National Statistics (ONS).
Chris Williamson, chief economist of Markit, the index firm, said on Wednesday:
The UK economy looks to have expanded by 0.5% in the final quarter of last year, according to PMI (purchasing managers' index data) business survey data. Sustained robust growth of activity and order books in December suggests the economy is starting 2016 with reasonable growth momentum, though there are signs that the recovery remains worryingly unbalanced and that business confidence is waning.
Growth in December was once again primarily fuelled by the vast service sector, where the PMI data point to a 0.5% expansion of output in the fourth quarter despite a slight loss of momentum between November and December. The fastest growth in the fourth quarter was seen in financial services and transport services.
However, while services provided the main impetus behind the ongoing upturn due to its sheer size, it was the far smaller construction sector which recorded the fastest rate of growth of the three main parts covered by the surveys, with the PMI reviving from November's seven-month low. Faster growth of house building and commercial construction offset a renewed decline in civil engineering activity.
The British Chambers of Commerce said Thursday that factory exports grew at their weakest pace in the fourth quarter since 2009.
the manufacturing sector continues to struggle. Domestic and export sales and order balances have now fallen well below their pre-recession levels in 2007, suggesting that the sector is close to stagnation.
The BCC said its quarterly survey with a response from about 7,500 members, showed an economy too dependent on consumers and the housing market rather than exports.
Brent crude for February delivery, has fallen to an 11-year low of just above $33 per barrel.
George Osborne says in the transcript of his speech:
Yes —there's good news here and right across the UK. That's because we have a national economic plan that backs business and skills, and is delivering growth, high employment, and rising wages. But as we start 2016, I worry about a creeping complacency in the national debate about our economy. A sense that the hard work at home is complete and that we're immune from the risks abroad.