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Osborne pledges 'solid' economy Osborne pledges 'solid' economy
(about 1 hour later)
Shadow chancellor George Osborne has said he wants a "more solid" economic model for Britain built on savings, enterprise and exports. Shadow chancellor George Osborne has said he wants a "more solid" economy for Britain built on savings, enterprise and exports.
In a speech he said the Tories would seek to protect Britain's credit rating and "eliminate a large part" of the budget deficit in the next Parliament. He said the economy under Gordon Brown was "severely unbalanced" and growth driven by "public and private debt".
He also outlined a list of business people supporting Tory economic policy. Easyjet founder Stelios Haji-Ioannou and Virgin chief Stephen Murphy were among those backing a new Tory economic model, the shadow chancellor said.
It comes as political parties trade accusations about their competing ideas for the economy. But economist Lord Stern denied reports he was to become a Tory adviser.
Mr Osborne began his speech at the British Museum by saying the "old" economic model was built on "shaky foundations" of public spending, "overblown" house prices and consumer borrowing - and said new sources of growth were needed. In a speech at the British Museum, Mr Osborne said the Tories would seek to protect Britain's credit rating and "eliminate a large part" of the £178bn budget deficit over the next Parliament - which he said went further than Labour's pledge to halve it in four years.
Housing 'bubble'
He said the pace of "fiscal tightening" had to be done in co-ordination with the Bank of England and said Labour's plans to halve the deficit in four years was "not regarded as credible".
He also said a Conservative government would seek higher exports, business investment and savings as a share of Britain's GDP.
Mr Osborne began his speech at the British Museum by saying the "old" economic model was built on "shaky foundations" of a public spending boom, an "overblown" banking sector, and consumer borrowing based on a house price "bubble" - and said new sources of growth were needed.
We want Britain to be selling to China and the rest of the world George Osborne
The Conservatives would "rebuild" the economy on "more solid foundations" he pledged.The Conservatives would "rebuild" the economy on "more solid foundations" he pledged.
Economic benchmarks
He said: "Borrowing from China so that we can buy the goods they make for us may be Gordon Brown's idea of our future but it is not the Conservative Party's. We want Britain to be selling to China and the rest of the world."He said: "Borrowing from China so that we can buy the goods they make for us may be Gordon Brown's idea of our future but it is not the Conservative Party's. We want Britain to be selling to China and the rest of the world."
He said new sources of growth were needed - supported by a competitive tax system and new infrastructure - like high speed rail and broadband.He said new sources of growth were needed - supported by a competitive tax system and new infrastructure - like high speed rail and broadband.
On cuts, the shadow chancellor said the Conservatives would "make a start" in 2010 - and did not elaborate on immediate spending cuts to be implemented in a post-election budget, which the Tories say would be held within 50 days of a general election.
Safer banking
Setting out eight economic "benchmarks" by which a Conservative government could be judged - he said Britain's credit rating was "under threat" of being downgraded - which would mean higher interest rates on national debt and throughout the economy.Setting out eight economic "benchmarks" by which a Conservative government could be judged - he said Britain's credit rating was "under threat" of being downgraded - which would mean higher interest rates on national debt and throughout the economy.
I should stress that I am not, and have no plans to be, an adviser to any political party Lord Stern
Other benchmarks included creating a more "balanced economy", raising the private sector's share of the economy in all regions and creating a "safer banking system".Other benchmarks included creating a more "balanced economy", raising the private sector's share of the economy in all regions and creating a "safer banking system".
On cuts, he said the Conservatives would "make a start" in 2010 - and did not elaborate on immediate spending cuts to be implemented in a post-election budget, which the Tories say would be held within 50 days of a general election. They would also be judged on the extent to which they reduced youth unemployment, improved UK ratings for tax competitiveness and business regulation and reduced carbon emissions and increased the UK's share of the global market in green technology.
And he read out a list of business chiefs who he said supported the Conservatives' economic model - including Easyjet founder Stelios Haji-Ioannou and Virgin chief executive Stephen Murphy - adding that they would be seeking endorsements from more businesses. I should stress that I am not, and have no plans to be, an adviser to any political party Lord Stern
He also said economist Lord Stern, who wrote a key climate change report for Labour and sits as a cross-bench peer, would advise the Tories on creating a "green investment bank". Mr Osborne also said the crossbench peer Lord Stern, who wrote a key climate change report for Labour, had "agreed to advise us on the creation of this green investment bank".
Spending cuts But amid reports suggested he had been "poached" by the Tories, Lord Stern issued a statement saying: "I would be willing speak to the Conservatives' advisory group about their ideas for a green investment bank, just as I am continuing to contribute to discussions with the Labour government about policies on climate change.
Shortly afterwards Lord Stern issued a statement saying: "I would be willing speak to the Conservatives' advisory group about their ideas for a green investment bank, just as I am continuing to contribute to discussions with the Labour government about policies on climate change.
"I should stress that I am not, and have no plans to be, an adviser to any political party.""I should stress that I am not, and have no plans to be, an adviser to any political party."
Labour has said that rather than promote growth, Conservative plans to make public spending cuts this year would "strangle" an economic recovery. 'Farcical'
Business Secretary Lord Mandelson claimed Tory plans for spending cuts would take £11bn out of the economy this year. Climate Secretary Ed Miliband told the BBC that Mr Osborne's economic policy was "increasingly farcical" adding that "within minutes" of Mr Osborne's speech it had started "to unravel" and accused the shadow chancellor of not saying how quickly he would cut the deficit and how much he would spend if the Tories won power.
Lord Mandelson accused the Tories of economic "illiteracy" and appearing "confused". He said Labour had "clear spending plans" for next year which were key to sustaining the recovery.
The Conservatives insisted their position had not changed, pointing out that £1bn could be saved immediately after the election by axing child tax credits for better-off families and cutting child trust funds. Mr Osborne also read out a list of leading business figures who he said had not publicly endorsed the Conservatives before but who "already think that this new economic model represents Britain's future" - and said they would be seeking more endorsements.
The Liberal Democrats have warned political dogma is dominating the economic debate. They were Easyjet founder Stelios Haji-Ioannou, Virgin chief executive Stephen Murphy, Kingfisher chief executive Ian Cheshire, GlaxoSmithKline chief executive Andrew Wittey, Diageo chief executive Paul Walsh, Autonomy chief Mike Lynch and Mick Davis, chief executive of Xstrata.
They said arguments over the deficit must be driven by the state of the economy not rhetoric.
With the public spending deficit expected to grow to £178bn this year, it is set to be one of the key battlegrounds at the coming general election.With the public spending deficit expected to grow to £178bn this year, it is set to be one of the key battlegrounds at the coming general election.
The economy came out of recession during the final quarter of 2009, but at a lower than expected rate of growth of 0.1%.The economy came out of recession during the final quarter of 2009, but at a lower than expected rate of growth of 0.1%.