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| Osborne: 'We need every country acting as one in search of growth' | Osborne: 'We need every country acting as one in search of growth' |
| (14 days later) | |
| George Osborne has issued a call for international action to bolster growth in the face of a “hazardous mix” of risks to the global economy. | George Osborne has issued a call for international action to bolster growth in the face of a “hazardous mix” of risks to the global economy. |
| In an speech to be delivered to UK business leaders attending the World Economic Forum in Davos, the chancellor said it was important to complete the economic reforms promised by political leaders around the world. | In an speech to be delivered to UK business leaders attending the World Economic Forum in Davos, the chancellor said it was important to complete the economic reforms promised by political leaders around the world. |
| In the face of the worst start of a year to the stock markets for a generation, Osborne said that the problems could be overcome. | In the face of the worst start of a year to the stock markets for a generation, Osborne said that the problems could be overcome. |
| Listing the falling oil price and anxiety about a slowdown in China, Osborne said: “It adds up to a hazardous mix. But my message today is one of confidence: we can meet these risks and overcome them if we stick to our plan. | Listing the falling oil price and anxiety about a slowdown in China, Osborne said: “It adds up to a hazardous mix. But my message today is one of confidence: we can meet these risks and overcome them if we stick to our plan. |
| “We need to see every shoulder at the wheel. Every country acting as one in search of growth.” | “We need to see every shoulder at the wheel. Every country acting as one in search of growth.” |
| Earlier this month Osborne had warned of a “dangerous cocktail of risks to the global economy” in a markedly different tone to that adopted in November when he had delivered his autumn statement. | Earlier this month Osborne had warned of a “dangerous cocktail of risks to the global economy” in a markedly different tone to that adopted in November when he had delivered his autumn statement. |
| In his speech in Davos, to be delivered on Friday, he said that the fall in oil prices to less than $30 (£21) a barrel was “helpful” to the assembled business leaders and to British families. But he said it was also hitting oil-producing countries hard. | In his speech in Davos, to be delivered on Friday, he said that the fall in oil prices to less than $30 (£21) a barrel was “helpful” to the assembled business leaders and to British families. But he said it was also hitting oil-producing countries hard. |
| Related: IMF demands EU debt relief for Greece before new bailout | Related: IMF demands EU debt relief for Greece before new bailout |
| “We are all here to talk about the future – for your businesses, for our countries. So I wanted to explain what the best antidote for the dangerous cocktail is: to offer concrete proposals on how the global economy needs to change. And explain how we plan to reform Britain’s economy too.” | “We are all here to talk about the future – for your businesses, for our countries. So I wanted to explain what the best antidote for the dangerous cocktail is: to offer concrete proposals on how the global economy needs to change. And explain how we plan to reform Britain’s economy too.” |
| “There’s a lot of transition taking place – transition that is difficult and turbulent, yes; but transition that is fundamentally positive too,” he said. | “There’s a lot of transition taking place – transition that is difficult and turbulent, yes; but transition that is fundamentally positive too,” he said. |
| “The Chinese are fond of their proverbs and they have a good saying. They say that talk does not cook rice. It is simple, it is true, and it is particularly relevant now. | “The Chinese are fond of their proverbs and they have a good saying. They say that talk does not cook rice. It is simple, it is true, and it is particularly relevant now. |
| His remarks were released just hours after the head of the International Monetary Fund, Christine Lagarde, had called for better communication from China to ease pressures in financial markets. Sidestepping questions about whether she wanted a second term at the IMF, she said: “Given the massive transitions in China, there is a communication issue – this is something that markets do not like. | His remarks were released just hours after the head of the International Monetary Fund, Christine Lagarde, had called for better communication from China to ease pressures in financial markets. Sidestepping questions about whether she wanted a second term at the IMF, she said: “Given the massive transitions in China, there is a communication issue – this is something that markets do not like. |
| “Uncertainty, not knowing exactly what the policy is. Not knowing exactly what the renminbi is valued against – the dollar, or a basket of currencies.” | “Uncertainty, not knowing exactly what the policy is. Not knowing exactly what the renminbi is valued against – the dollar, or a basket of currencies.” |
| Chinese delegates repeatedly insisted they were not losing control of the economy, growth of which has slowed to 6.8% in the last quarter, its slowest pace in 25 years. Fang Xinghai, vice-chairman of China’s securities regulatory commission, was sitting alongside Lagarde when he said: “I am here to communicate.” | Chinese delegates repeatedly insisted they were not losing control of the economy, growth of which has slowed to 6.8% in the last quarter, its slowest pace in 25 years. Fang Xinghai, vice-chairman of China’s securities regulatory commission, was sitting alongside Lagarde when he said: “I am here to communicate.” |
| He played down the volatility in the Chinese stock market, saying that while it was down 40% from its peak, it was up 30% over 18 months. He reiterated that there was no basis for China to devalue the yuan. But, Fang added: “In China, we cannot afford to let the growth rate drop too sharply, because that will ignite a lot of financial problems.” | He played down the volatility in the Chinese stock market, saying that while it was down 40% from its peak, it was up 30% over 18 months. He reiterated that there was no basis for China to devalue the yuan. But, Fang added: “In China, we cannot afford to let the growth rate drop too sharply, because that will ignite a lot of financial problems.” |
| Lagarde also held talks over the situation in Greece with the Greek prime minister, Alexis Tsipras, on the sidelines of the Davos meeting after which it became clear the European Union will need to provide significant debt relief for Greece if it is to persuade the Washington-based fund to back the third bail out. | Lagarde also held talks over the situation in Greece with the Greek prime minister, Alexis Tsipras, on the sidelines of the Davos meeting after which it became clear the European Union will need to provide significant debt relief for Greece if it is to persuade the Washington-based fund to back the third bail out. |
| After what was described as a cordial meeting, the IMF said it was only prepared to support the recession-ravaged eurozone country on a strings-attached basis. | After what was described as a cordial meeting, the IMF said it was only prepared to support the recession-ravaged eurozone country on a strings-attached basis. |
| It said Greece had to be prepared to implement a tough package of economic reform and the country’s eurozone partners had to be willing to write down Greece’s debts. | It said Greece had to be prepared to implement a tough package of economic reform and the country’s eurozone partners had to be willing to write down Greece’s debts. |
| The IMF took part in the first two Greek bailouts but is concerned that, at 175% of GDP, Greece’s debts are too burdensome and will prevent a lasting recovery. Lagarde told Tsipras the IMF regarded reform of Greece’s pension system, which accounts for 17.7% of GDP, as vital. | |
| The IMF said of the talks: “The managing director reiterated that the IMF stands ready to continue to support Greece in achieving robust economic growth and sustainable public finances through a credible and comprehensive medium-term economic programme. | The IMF said of the talks: “The managing director reiterated that the IMF stands ready to continue to support Greece in achieving robust economic growth and sustainable public finances through a credible and comprehensive medium-term economic programme. |
| “Such a programme would require strong economic policies, not least pension reforms as well as significant debt relief from Greece’s European partners to ensure that debt is on a sustainable downward trajectory.” | “Such a programme would require strong economic policies, not least pension reforms as well as significant debt relief from Greece’s European partners to ensure that debt is on a sustainable downward trajectory.” |
| The Greek government said the talks had been sincere. | The Greek government said the talks had been sincere. |
| • This article was amended on 3 February 2016. An earlier version said that Greece’s pensions system “accounts for 10% of GDP”. This has been corrected. |