Osborne: Political not economic solutions needed to solve crisis

15th August 2011

In an article for the Financial Times, co-authored by other finance ministers from around the world, Osborne said the biggest barriers to economic recovery were political, not economic.

Mr Osborne calls for "hard decisions on spending, entitlements and taxation in countries with large budget deficits". The article is co-authored with the finance ministers of Australia, Canada, Singapore and South Africa.

Mr Osborne believes the article shows a growing international consensus that the UK government has got its fiscal strategy broadly right, and that Labour, which is arguing for a slower rate of deficit reduction, is internationally isolated.

A Treasury aide said: "It has been true for some time that those critics [of the government's fiscal policies] are out of line internationally. This is further proof of that."

The article risks annoying US and eurozone politicians, who come under implied criticism for their policies.

On The Guardian  Robert Zoellick argues that the market has lost confidence in the economic leadership of Europe and the United States.

According to the report the World Bank president "indicated that American and European leaders were not acting quickly enough".

He said: "I think those events combined with some of the other fragilities in the nature of recovery have pushed us into a new danger zone. I don't say those words lightly … so that policymakers recognise and take it seriously for what it is."

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