British chancellor of the Exchequer George Osborne claims UK economy ‘turning corner’

Britain's economy "is turning a corner", chancellor George Osborne claimed yesterday in a speech designed to heap pressure on his political opponents in the run-up to the party conference season.

Speaking at the One Commercial Street development on the fringe of the City of London, the chancellor used the half-finished development of offices and homes as a parallel with the government’s efforts since 2010 to repair the economy.

“The economic collapse was even worse than we thought. Repairing it will take even longer than we hoped. But we held our nerve when many told us to abandon our plan,” he said.

The speech was designed to claim victory in the three-year debate over fiscal policy, against those with weaker plans for deficit reductions.

Fiscal plans

“Those in favour of a Plan B have lost the argument,” he said, pointing out that economic indicators had improved even though the government had not changed course on its fiscal plans, something his critics had said was highly unlikely.

Mr Osborne’s remarks followed a week in which independent institutions have backed the idea that the UK may be reaching “escape velocity” from the longest downturn on record.

The National Institute of Economic and Social Research, a leading research body, estimated that the UK expanded by 0.9 per cent in the three months to the end of August. The Organisation for Economic Co-operation and Development also upgraded its forecasts, saying it expects the UK to grow by about an annualised 3.5 per cent in the second half of this year.

Economic output is still below its pre-recession peak, however. The last official figures released by the Office for National Statistics, for the second quarter of 2013, showed that the British economy was still 3.2 per cent smaller than in the first three months of 2008.

The speech forms part of an attempt by Mr Osborne to defend his economic record, and discredit Labour criticisms, before the party conference season. Last week Ed Balls, the shadow chancellor, suggested the government's economic plans had done "long-term damage" to the country. – (Copyright The Financial Times Limited 2013)