LONDON - Britain's Treasury chief offered a dampened view of the economy on Monday, warning that substantial savings must be gleaned from welfare cuts if the country is to eliminate the deficit.
The British economy has been enjoying
a stronger recovery than most European countries, but George Osborne noted
there are still big underlying problems.
He said 2014 is to be the "year
of hard truths" and that the country faces a choice.
"Do we say: 'the worst is over;
back we go to our bad habits of borrowing and spending and living beyond our
means -- and let the next generation pay the bill'?" he said.
Osborne told workers at a Birmingham
company that supplies auto components that billions of pounds (dollars) in
welfare cuts will be needed to reduce the deficit, which was swollen by the
The government deficit dropped to 5.2
percent of gross domestic product in the 2012-2013 fiscal year, from 7.6
percent in the previous one.
His sober message comes in stark
contrast to the recent news on Britain's economy. Though the recovery from the
2008-2009 recession hasn't been electrifying, Britain is doing better than most
other major economies around the world. Its quarterly growth rate of 0.8
percent in the third quarter is better than Germany's 0.3 percent and the
overall European Union's 0.2 percent.
At the same time, unemployment has
dropped to 7.4 percent, its lowest rate in 4 years, and inflation has dropped
to 2.1 percent, just slightly ahead of the Bank of England's 2 percent target.