The comments made by George Osborne, the former Chancellor of the Exchequer, on Twitter on 23 October 2022.
Very welcome and sensible judgement call by Boris Johnson – the country was heading for a constitutional crisis. Instead Rishi Sunak can now – with hard but necessary decisions – begin to restore Britain’s economic credibility and good governance.
The comments made by George Osborne, the former Chancellor of the Exchequer, on Twitter on 17 October 2022.
Congrats to Jeremy Hunt for taking big bold steps to restore U.K. fiscal credibility – reversing most of mini budget & in effect raising income tax (from the 19p legislated by Johnson gov). Not sensible for PM to hide away – she needs to front this to have any chance of survival.
The speech made by George Osborne, the then Shadow Chancellor of the Exchequer, on 12 May 2006.
“I am delighted to be here at the Credit Today conference, and to follow such an impressive array of speakers who have covered such broad subjects.
I have been impressed by the focus of the credit industry on controlling risks and striking the balance between competition and responsible lending.
That is what I want to talk about today.
The story of the credit industry has a rich history, and is closely intertwined with the development of the modern economy that we live in.
The first recorded loan transactions known to man date from Mesopotamian agreements etched in stone, paying interest in silver.
And the Romans entered into contracts based on contingent liabilities.
In early modern times, first in Holland and later in London in the sixteenth and seventeenth centuries, credit began to finance an expansion of world trade that heralded the beginning of the industrial revolution.
To pay for the ships and crew that undertook global trade, the entrepreneurs of the day needed to borrow. Until this first expansion of credit, only kings had the gold to pay for ships. But as debt finance grew, so did the merchants who brought spices from the east, and cotton from the west, and returned with cloth.
By the end of the seventeenth century, the Government too saw the advantage of credit, and in 1694 King William III set up the Bank of England to borrow from his people. That innovation is often credited with underpinning victory in King William’s war against France three years later.
Since then the industry has expanded, and London has grown into the largest international financial centre in the world. Over a million people now work in the UK financial services sector, and in London, nearly one in ten is employed in finance. Financial products of all kinds, including credit, are one of our key exports.
In recent years we have seen another expansion of credit, both private and public. Since the mid 1990s, the level of personal debt has risen in double digits each year, while inflation has remained low. And the level of private sector borrowing, on and off the balance sheet, has rocketed.
Borrowing by households has risen to almost £1.2 trillion. That’s £40,000 for every family in Britain. A fifth of that debt is unsecured, borrowed on credit cards, personal loans, and overdrafts.
This great expansion in credit brings both challenges and opportunities.
Free access to credit allows people and families to plan their budgets. Gone are the days when we had to wait in turn for access to a mortgage, when the building society would tell us when we were considered responsible enough to buy our first home. With freer access to credit, young people can apply for mortgages when they choose.
Unsecured credit helps us to manage our finances, to smooth over tricky times, and to plan when we spend. Access to credit allows us to move money over our lifetime, to spend when we need it, and earn it back later. So when we discuss the challenges that are posed by debt, we must not lose sight of the huge benefits that access to credit can bring.
As in many markets, liberalised credit markets have boosted our freedom and boosted our economy.
But as well as these great advantages, the expansion of credit has brought challenges. The Conservatives have been very aware of these challenges in recent years.
There are two challenges I particularly want to talk about today. First, for some, especially vulnerable, families, too much debt can cause misery and great financial hardship. And second, high levels of debt, both public and private, make the economy more vulnerable to certain types of shock, and may put macroeconomic stability at risk.
For families, and for the wider economy, more debt means more vulnerability.
Most of us use our credit cards every week, and many pay off our balances at the end of each month, and we can manage our mortgage payments. But that isn’t the case for everyone.
Just this week, the governor of the Bank of England described the rise in debt and bankruptcies as a ‘social problem that is materialising’. He is right. We are in danger of becoming credit card Britain.
Last year, three million people had problems paying off debt. Another twelve million have kept up payments only after a struggle. 1.1 million people contacted the Citizen’s Advice Bureaux with debt-related enquiries – up 47% over the past five years. So debt is a significant problem for a small but important minority. For many of those struggling with debt problems are also the most vulnerable – often living from benefits or in badly paid jobs.
The Financial Services Authority has spoken of a ‘financial crisis’ for 18 to 40 year olds. Average debt for 18 to 24 year olds has doubled to £15,000 since 1999. And Alliance and Leicester has found that those in their 20s pay as much on average in interest as those in their 30s and 40s, despite usually not yet having a mortgage.
This is not a problem that is going away. As we as a nation get richer, problems with debt are getting worse. Bankruptcies have doubled in the past year. That may partly be due to a change in the law in England and Wales. But even in Scotland and Northern Ireland, where the regime has not been changed, bankruptcies have risen. Last year alone, 120,000 people were declared bankrupt – three times more than in 1997.
Even despite the benefits of more freely available credit, we cannot ignore those whose lives are made a misery by debt.
Like the case of a lady who built up £58,000 of unsecured debt despite telling her creditors that her only source of income was from benefits. Or the pensioner who attempted suicide after she acquired 25 personal loans and credit cards totalling £135,000 of debt over a decade. A man from Yorkshire whose only income was disability benefits accrued £40,000 in unsecured debt from several lenders. When he first applied for a card he had expressed doubts to the lender about his creditworthiness, but the lender advised him to ‘be creative’.
We need to consider imaginative solutions to these interconnected and difficult problems.
For policymakers who believe in markets, this leaves a difficult challenge.
I instinctively believe in the power of business to generate wealth and opportunity, as well as the tax revenues that fund our public services and infrastructure.
Like you I want a strong and healthy credit industry. And like you I want that industry to be responsible.
That is what David Cameron said earlier this week when he talked about corporate responsibility.
Every time a business behaves irresponsibly, it makes it that much harder to persuade people that business is a force for good. If the political response to corporate responsibility becomes the preserve of the left, then the response is over-regulation and yet more burdens.
That applies in the domestic debt market too. Irresponsible lending to those unable to cope is bad for people, and it’s bad for business too. In the short term, it’s bad for the bottom line as irresponsible lending is less likely to be paid back. And in the long term, it harms the good name of business and encourages those who don’t believe in or understand business at all to interfere and impose new regulation.
So what can we do?
Last year the Griffith report, commissioned by the Conservatives and produced by Brian Griffith of Goldman Sachs, reported on possible solutions to the challenges we face. I am glad to say that some of those recommendations have been taken up. I might suggest four areas that we must consider in more detail.
We must, for instance, continue the FSA’s work in financial literacy, so that all families understand the consequences of taking on debt. Well informed customers are better placed to borrow responsibly – and better financial literacy will lead in turn to even less need for regulation. Some people, for instance, believe that a higher APR is a good reason to choose a credit card. According to a survey by Norwich Union, over three quarters of people find finance complicated and around half said that complexity has put them off addressing their financial needs.
As well as boosting financial literacy to improve the responsibility of customers, we must ensure that credit advertising and credit scoring are responsible. It is a knee-jerk reaction of an interfering Government that responds to this challenge with yet more regulation. But it is in the credit industry’s own interest to advertise responsibly.
And we can support measures for helping families out of debt. I want to pay special tribute to the work of the Citizen’s Advice Bureaux and others in helping so many people who find themselves in difficult financial situations. Their services should be properly funded, because if they are not then it is the state that will have to pick up the bill.
These are all step we should take. But many of the most difficult cases, like these, occur when people accumulate debt from many different lenders.
While any one loan may be affordable, taken together, loans from many different lenders can tip a family over the edge. So responsible credit scoring should take into account not just defaults, but the financial stress of any applicant.
But that sort of responsibility is difficult without adequate procedures for data sharing. The existing data protection legislation causes difficulties, even among lenders who want to share.
So we should consider extending data sharing among lenders, particularly of unsecured debt, so that lenders know their clients’ full financial picture before agreeing more loans. I recognise the work that the industry and the Treasury Select Committee have done in pushing forward this agenda.
It seems to me that data sharing doesn’t just help lenders to assess the reliability of a client. But, properly introduced, it would help to protect vulnerable clients from resorting to many different lenders, often to pay interest on other debt.
In the past there was no need to share data. Credit was effectively rationed, through queuing. And the number of lenders was small. In 1971, there was just one credit card – the Barclaycard. Now, there are over 1,300 types of credit card, and over 70 million cards in issuance – that’s more than one for every man, woman and child in the country.
So policy must adapt to changing circumstances.
I acknowledge that there are concerns about data sharing. We would not want data sharing to become an unnecessary regulatory burden. But data sharing can improve the competitiveness of the credit market. Only with more accurate information about risk can lenders price risk more accurately.
And data sharing benefits highly credit-worthy customers too, as lenders know who the low-risk customers are too.
So I applaud the strides have already been made by some banks to share data with customers’ consent through credit rating agencies.
We must strike the right balance, appropriate for the challenges that we now face.
We can see that excess debt increases vulnerabilities at the personal level. And it causes vulnerabilities at the national level too.
Over the past nine years, the ratio of debt to annual national income has doubled.
Four fifths of the outstanding debt has been secured against housing, and has in part financed the rapid increase in house prices.
As the debt and house values have risen in tandem, so the average homeowner’s balance sheet has not been damaged. But the mismatch between a fixed-price debt and a variable priced asset heightens exposure to a fall in house prices. With larger debts relative to income, the impact on consumption and therefore on the wider economy of a fall in house prices would be bigger.
The remaining fifth of households’ debt, lent on credit card, personal loans, and overdrafts, usually funds consumption. Growth in the economy is at risk if it is mainly fuelled by consumption – both by individuals and by the Government – that is funded by debt.
An economy built on borrowed money is eventually living on borrowed time.
And on top of all the mortgages, credit cards, and bank loans, there is one man who has borrowed more than us all. The Chancellor has borrowed a further £100 billion on our behalf. He plans to borrow another £150 billion over the next three years. And that is before you add in the billions borrowed and hidden off the balance sheet.
These twin deficits – in the public and private sectors – combined with a current account deficit of almost 4% of GDP, means that overall, Britain is borrowing from overseas to spend, and our imports are out of balance with our exports. In other words, we have a trade deficit, which over the first three months of this year was the largest on record.
These imbalances in our economy may not reverse soon.
Economists play a game of trying to predict when the structural imbalances will unwind with as much enthusiasm as politicians playing the game of when Tony Blair will depart. At least in our game there’s an end in sight.
What the economists do agree on is that imbalances caused by profligate Government borrowing and high private borrowing makes our economy more vulnerable to instability, like a sharp exchange rate movement, or a fall in asset prices.
So just as private lending should be responsible, Government must be responsible too. We must strengthen the fiscal rules, and instead of fixing the rules to fit our spending, we must fix our spending to fit the rules. We must be transparent about Government borrowing – we must share data too. In January we proposed a ‘triple lock’ on stability to do just that.
The modern Conservative approach to debt is part of our broad economic strategy.
To re-build the competitiveness of our economy, by entrenching stability, and encouraging growth.
By taking long term decisions;
by facing up to the challenges of the new global economy;
and by trusting people, and sharing responsibility.
We want to build an economic strategy that can make Britain the most competitive place in the world to do business, where Government doesn’t just get in the way, with rising living standards for all.
We are at the start of a journey, as we build the ideas, and vision, and policies that will help Britain meet the challenges of the twenty first century.
And I would like to ask for your help in travelling on that journey too. We want to work with you, listen to you, both directly and through our policy groups on economic competitiveness and social justice, and I look forward to participating in this debate and learning from it in the months and years to come.
The comments made by George Osborne, the former Chancellor of the Exchequer, on 30 October 2020.
Without irony, Len McCluskey says suspending Corbyn could cost Labour the next election – when it was his support for Corbyn that cost Labour the last two elections
Below is the text of the speech made by George Osborne in London on 27 February 2006.
It is a great pleasure to be here today to talk about how we help families balance their lives at home and at work. It is particularly good to do so in the presence of so many members of the Women to Win campaign and representatives from so many childcare charities.
For too long there has been a false impression that women’s issues are somehow separate from mainstream politics and mainstream policies. But every part of politics, and every policy, is as much for women as it is for men. Indeed, mothers are often the member of the family who has by far the most direct contact with public services like schools, hospitals and public transport and may have a deeper insight into what needs to be done to improve and reform them.
So the different perspectives and emphasis that women have cannot be treated as an additional extra, to bolt on to existing policies, but instead must be an integral part of our political system.
And to do that, we Conservatives need to appeal more to women, and to be represented by more women – more women of the calibre and ability of Eleanor Laing and Maria Miller, who join me on the platform today.
The Conservative vote amongst women was eight points behind Labour at the last election. We were level amongst men. Among women aged 18-34 we came third. At the last election almost half of the candidates in our 50 least winnable seats were women, but in our 50 most winnable seats, just one in eight were.
The Conservatives need more women at all levels in the Party, not only so that we look more like modern Britain, but even more importantly, so that we think like modern Britain. Only with more women in key positions will we, or any other Party, properly represent the people we aspire to lead. That is why the far-reaching changes David Cameron is making to candidate selection, including the Priority List, are so important.
It is not about political correctness. It is about political effectiveness.
Of course most issues are important to both women and men. We all care about the level of crime, the state of the health service, and the affordability of housing. But by ensuring that both men and women play an integral part in our Party at every level, we can be even more effective on those issues that we know are especially important to women.
One of those issues is childcare. For too long it has been seen as peripheral to the mainstream political debate.
Not any longer. David Cameron and I are determined that support for families and their childcare needs will be at the heart of what we offer the country at the next election. And I am not just saying that because David’s just returning from paternity leave.
For Britain is changing.
Just fifteen years ago, 59 per cent of women of working age with dependent children were in paid employment. Today that has risen to 68 per cent. And the group of women that have entered the workplace most rapidly are mothers of children up to age four.
There are many complex reasons behind these changes. Social and demographic changes are a factor. And increasingly both parents need to work. As research showed just last week, there is a huge financial cost, estimated at over half a million pounds, to taking time out of work to stay at home and look after a family.
Let’s be honest. In the past the Conservatives have given the impression that young mothers should stay at home.
Today the Labour Party gives the impression that all young mothers should work.
Both are wrong. Both are trying to impose choices on mothers. We need a new approach for a new generation. Instead of imposing a choice on mothers, we should support the choices that mothers make for themselves.
Mothers who work should not be made to feel guilty. Nor should mothers who stay at home. Let us stop trying to tell families how to live their lives. Let us instead support the lives that families live.
Every parent feels the stresses and strains of balancing work and family life. We live in an age in which only 10 per cent of people work a nine to five, 40 hour week – in which many feel that they’re actually working 24/7, and have not so much a work/life balance as a work/life imbalance, especially when it comes to childcare.
We are constantly juggling the pressures of work and family; relying on relations, friends and neighbours as well as paid carers for childcare; struggling with costs, searching for information about childminders or breakfast clubs or playgroups; and negotiating their way through the complexity of tax credit system. These problems do not get easier as our children grow older – in fact the demands on the parent can grow.
Looking for childcare is breathtakingly complex, and especially formidable for lone parents or parents from disadvantaged groups, or for parents with disabled children.
And the issue of childcare is not just about quality of life for parents.
It’s about children – their health, their development, their happiness, their opportunities. In short, it’s about giving them the best start in life.
For all the evidence shows that the quality of childcare from a very young age affects life chances and educational outcomes.
A single telling fact should cause politicians of all parties to hang their heads in shame: it is harder now for a child born to a low income family to escape his or her beginnings and climb to the top of the employment tree than it has been for nearly two generations. Over the past thirty years, social mobility has fallen. And it continues to fall.
Some on the left use this fact as evidence that all young mothers should work and the government must provide all childcare.
As Gordon Brown put it in December, when it comes to balancing work and family life, only the state can guarantee fairness. His eyes lit up when he called the provision of childcare for children up to 48 months “a whole new frontier of the welfare state”. At its worst it is a vision of a Brave New World: rows of mothers at work and rows of tiny children in uniform state-run nurseries. A real nanny state.
Instead, I believe that every family wants something different from childcare. Each has different needs, different desires and different decisions to take. You cannot impose a one-size-fits-all model of childcare provision.
So what is our alternative vision?
We are three years from the next election and just twelve weeks into David Cameron’s leadership, so I am not about to announce detailed policies. We have an excellent shadow team in Paul Goodman, Tim Loughton, Trish Morris, Eleanor Laing and Maria Miller who are working together to develop those policies. They will be supported by our Policy Group on Social Justice which today I am asking to help us with the hard-headed research and innovative thinking that will underpin their work.
But I do want to spell out three clear principles that I believe should guide that thinking.
The first principle is that we should provide financial support for the childcare choices that families themselves make; not use financial support as a stick to force parents into a particular choice.
There are some on the right who say the state shouldn’t be providing any financial support at all. I do not agree. Society has an interest in helping women who work to also provide the best care for their children. We cannot encourage women to have good careers and be good mothers, and then leave them to fend for themselves.
So government has a key role in making good childcare affordable.
Sadly, our childcare costs are now among the highest in Europe. According to a recent Daycare Trust survey, the cost of a typical full-time nursery place in England has outstripped inflation by nearly 20 per cent during the past five years.
The childcare tax credit was supposed to help. But many parents complain that instead of relieving the burden, the sheer complexity of the tax credit system seems to add to the work/life imbalance that they feel.
Perhaps that is why less than a quarter of low income families claiming both the child tax credit and the working tax credit claim the childcare tax credit element too. Parents can’t use it, informal carers can’t access it, and its eligibility is restricted.
I want our policy group to look at ways of making the support provided by the childcare tax credit simpler and much more user-friendly so that parents can actually use it. I would welcome the advice of those charities and voluntary organisations, like the Citizens Advice Bureau, who are currently trying to help navigate mothers through the existing maze.
I also want to look at whether we can expand the range of childcare that is supported. At the last election Theresa May produced imaginative proposals to do just that and in particular to unlock the expertise of family relatives. We should look closely at those ideas as we move forward. For the Government’s own research shows that 74% of the total childcare chosen by parents is informal, yet the Government is doing little to support those choices.
Of course, I am not about to write our 2009 Budget. Decisions on the support we can provide for childcare must take place within the constraints of controlling public spending. What I am talking about today is the broad framework, and providing financial support to families for the childcare choices they make is the first principle of our new approach.
The second principle is that we should expand the range of childcare choices available.
The Government should not be seeking a monopoly in the provision of childcare or nursery places. Yet that is what Gordon Brown’s implies when he talks about expanding the frontiers of the welfare state.
That is not what parents want. They want to choose for themselves from an array of sources that suit their needs and the needs of their children: between one-to-one care to groups, between state and private nurseries, between informal and formal care, between the qualified child-minder or nursery assistant and their own family and friends.
Research shows that the best way to improve children’s life chances, and both their social and intellectual development, is to understand the careful balance between the individual care a child receives and the role more formal group care has to play. Research clearly shows that good quality formal childcare and pre-school stimulates children, often resulting in an earlier development of verbal and cognitive skills. And this has to be balanced with the need for emotional support in the early years which may be better delivered in a one to one situation. So we can see that there can never be just one solution to the care needs of a child and that is why flexibility in provision is vital.
We want to allow and encourage the private and voluntary sectors to play a larger role in raising the life chances of children and striking the right balance between play and learning in the nursery and classroom.
That means insisting that all providers, whether or not they’re part of SureStart, operate on a level playing field.
Let me be absolutely clear. We support SureStart. We are not planning to close it down. But we do have concerns about the way SureStart is developing – concerns that are shared by many on the left.
One of the most attractive feature of the SureStart scheme and the new children’s centres when they began was that both were embedded in the local community, run by those who had campaigned to bring the new project to their area. But as the initial SureStart scheme is being broadened out across the country, and new children’s centres are created, control is increasingly been handed over to local authority bureaucracies and real community involvement is diminishing.
Good local voluntary and private provision is being crowded out. For every two new childcare places provided in the last eight years, one existing place has been lost. Of even greater concern are the falling occupancy rates. Two years ago 85 per cent of available childcare places were taken up; latest figures put the number now at just 76 per cent. This threatens the survival of childcare providers.
When David Miliband argued last week that an ever-expanding state is not crowding out the voluntary sector, here is clear evidence that he is wrong.
So we support SureStart and children’s centres. But we want them to develop in the spirit in which they began by involving local families closely in the management and operation of their centres. And we do not want the Government rigging the childcare market against those private, voluntary and independent providers operating outside the SureStart umbrella.
Again, it is all about us supporting the choices that families make, not make those choices for them. That is why expanding the range of childcare choices is the second principle that guides our approach.
The final principle flows from our understanding that good, affordable and diverse childcare is only one part of what society can do to support the choices that mothers make about balancing their work and home lives.
Government also has a role in protecting the careers of women who want to take time off to look after their children, particularly when they are just born.
Many good employers offer generous maternity support. They understand the importance of a motivated, happy and loyal workforce.
But we do need to provide legal protection to those who are not fortunate enough to work for those businesses. That is why at the last election and today we support the extension of maternity leave and maternity pay, although we recognise the cost that that imposes, especially on smaller businesses, and so we will reduce the burden of regulation elsewhere.
And we applaud the protection provided by the Equal Pay Act. There have been Conservative Governments in office for over half of the thirty years the Act has operated and during that time the pay gap has itself halved.
But we cannot be satisfied with where we are. I agree with the Women and Work Commission when they say today that there is still much to do. A pay gap continues to exist – particularly for part time work. And part-time, flexible working is central to how many mothers try to balance their responsibilities. So the message from my party should be firm. Unequal pay based on sex discrimination is completely and totally unacceptable in this day and age. We will do what it takes to stamp it out.
Let me conclude.
Providing financial support for families who use childcare. Increasing the choice of childcare available to parents. Protecting women who want to be good mothers and have good careers. These are the principles that will guide our thinking in the months and years ahead.
We reject those who say that a women’s place is in the home. We reject those who say that all women should work. We will support choices women make about their lives, not impose choices on them.
That is modern compassionate Conservatism.
Below is the text of the speech made by George Osborne, the former Chancellor of the Exchequer, in Chicago on 23 September 2016.
Thank you for inviting me here to Chicago to speak to you this evening.
I accepted the invitation not just because this Council is renowned around the world for its contribution to the debate about how we manage global challenges; I accepted because this lecture is in honour of Louis Susman, a quite exceptional US Ambassador to the United Kingdom.
I worked closely with Lou as the new British Government, led by David Cameron, sought to find its feet in the world six years ago. The bond we formed with the then still relatively new Obama administration was a strong one. On the fallout from the financial crisis, on the challenge of the Arab Spring, on the promotion of free trade, we worked together as close partners and allies.
And with Lou and his wonderful wife Marjorie, the serious business of politics was always mixed with the smart diplomacy of good hospitality. I remember the spectacular dinner they invited me and my wife Frances to at Winfield House, the palatial ambassador’s residence in Regents Park.
President Obama was there in his tux. Her Majesty the Queen was wearing her diamonds. I walked into a room full of the A-list, from Tom Hanks to David Beckham. Frankly, I was a little over-awed. Then Lou came up to me and said: the Queen and the President are having Martinis, you want to join them? After that, the evening slipped by beautifully.
That glamorous night with the Susmans was one of the many high points of the six years that I spent as Britain’s Chancellor of the Exchequer. There’s little doubt what one of the low points was.
The evening of 23rd June this year. When David Cameron and I watched the television in the first floor study of 10 Downing Street, as the results came in from the European Referendum and it became clear that the British people had voted to leave the EU.
That result has sent shock waves around the world. People here in the United States have been asking me whether it means the retreat of Britain as an outward facing global power; they have questioned what it means for the integrity of the western alliance; they worry about the consequences for European stability; and they wonder whether the deeply felt economic insecurity and anger at the established political order so evident in that referendum vote will have echoes here in the United States this fall.
I don’t pretend to have definitive answers to those questions tonight; and I would be skeptical of anyone who claims they do. That history is not yet written. But I do intend to spend this time ahead of me, out of government office but still in the House of Commons, trying to understand better the powerful forces that are driving the disruption of our democratic politics and widespread feelings of insecurity.
And I want to help devise what the best response should be from those of us who believe that free trade, open societies and international co-operation are the best guarantors of prosperity and a stable world order.
For if we don’t provide answers, then others will – those who want to erect barriers and sow division and exploit new technology to echo-back to people their anger and insecurity.
Politics, like nature, abhors a vacuum – and if the mainstream can’t find answers, then the extremes will. And their solutions will make the situation for those yearning for more economic security and control over their lives a whole lot worse.
Let me start by examining that European referendum result. You cannot say that the British public were not engaged in the choice they were being offered. More Britons went to the polls on 23rd June than in any general election in British history.
More voters voted to Remain in the European Union than have ever voted to elect a party of government; and of course, even more – 52% of the total – voted to Leave. Among that 52% were close to 3 million voters who had not voted in our general election a year ago.
In short, this was a huge exercise in direct democracy. And so, frankly, ignoring the result or thinking that we can simply have a re-run to get a different result is – I believe – fanciful. We can’t behave like the East German government who, when faced with an election result they didn’t like, said it was time to elect a new people.
Britain has taken a decision, and it’s difficult to imagine the circumstances in which that doesn’t lead to Britain leaving the European Union.
That, however, is just one decision – and it gives rise to many future decisions for which we don’t yet have answers.
Since July, work has been done to understand what people’s primary motivations were for voting to leave. Half of all Leave voters said the main reason was that they felt decisions about the UK should be taken in the UK. A third of Leave voters cited control over immigration. Just 6% of Leave voters – around one in twenty – said their main reason for voting was that ‘when it comes to trade and the economy, the UK would benefit more from being outside the EU’.
There are lessons to be learnt across the political spectrum. Those who, like me, frankly underestimated public concerns about sovereignty need to think hard about how we can give people a greater say about the decisions that affect them and their community.
My feeling is that the answers go deeper than simply repatriating decisions from Brussels to Westminster – that people sense there are forces beyond their control that are driving their lives, from remote government to technological change, and that makes them feel insecure.
Likewise, those who claim that voting to leave was a great rebellion against the economic status quo need to accept that precious few Leave voters thought the country would be more prosperous outside the EU.
This was not a popular mandate for less free trade or for a more closed economy.
We should bear that in mind as we approach the decisions that lie ahead.
We may be leaving the EU, but we are not clear about what we are joining. What is the new relationship we will have with our European allies? What will the trade arrangements look like? Not just for physical goods, but intangible services like financial services? What will our border controls with our neighbours be, including at our currently invisible land border with Ireland? What are the criminal justice, immigration and extradition agreements we will strike? There may be millions of continental Europeans living in Britain, but what about the millions of Britons living in continental Europe? How, if at all, will we participate in collective European policy towards the Mediterranean and Eastern Europe?
We don’t have answers to any of these questions – and nor should we rush to provide them. This is the most important set of decisions Britain has faced since the Second World War, and getting them right is more crucial than taking them early.
Get them wrong – consign Britain to a relationship with our neighbours that makes us permanently poorer and more insecure – and the people most likely to pay the price will be precisely those who already feel the most marginalised.
So David Cameron was correct, on the morning after the referendum result, not to trigger the exit procedures that Article 50 of the European Treaties provide.
I commend Theresa May for resisting the pressure, from some Brexiteers at home and from some European capitals abroad, to trigger Article 50 this autumn. She is right that we need time to decide what Britain’s approach to these negotiations will be before we enter into them.
In any case, it is highly unlikely that the rest of Europe will be in any position to conduct serious negotiations until the autumn of next year.
My experience of six years of European negotiations is that nothing serious happens until the French and, especially, the German governments take a view – and both countries will be preoccupied with their own domestic elections for much of next year.
That’s an opportunity for the British Government and the House of Commons to think hard about how we should approach the decisions we now face.
For me, the guiding principle should be this: we should aim for the closest possible economic and security relationship with our European partners while no longer being formal members of the EU.
That is most likely to deliver the prosperity and stability and control over events that people are clearly yearning for. For what are the alternatives?
I am all for strengthening Britain’s ties with the rest of the world.
Throughout my fifteen years in Parliament, I have championed the vital alliance we have with the United States – both when it was fashionable and when it has been unfashionable.
It is the cornerstone of western security and prosperity. But it is an alliance that all British Governments and US Administrations since the war believe is enhanced because of Britain’s engagement in Europe.
Likewise, in government, I did more than almost anyone to promote Britain’s ties with the fast growing emerging economies – risking controversy to form a new economic partnership with China and making more trips to India than any Chancellor before me.
But these are complements to our relationships with our European allies, not substitutes. Britain cannot choose the continent we exist in. We are – and have always been – a European power.
Our economy is completely intertwined with the European economy – and always has been. Close to half of all our exports go to our near neighbours, and no amount of extra trade with the likes of Australia or New Zealand – desirable as it is – can possibly replace those large, mature markets on our doorstep.
Our financial centre is a global one, but one of its huge strengths is that it services a continental economy. I made it a special mission of mine to make London a home to Indian masala bonds, Islamic finance and offshore renminbi trading – last year, more renminbi bonds were issued in London than the rest of the world outside of China put together.
But again, this is not a substitute for our role as Europe’s wholesale financial centre – it is a complement – and it is not just in our interests, but the interests of the whole of Europe that it remains so.
Indeed, it is in the whole of Europe’s interest that the voice of Britain as a force for economic reform, global competitiveness and free trade is not lost from the collective discussion about how we raise the productivity of the whole European economy – or else we will all be poorer for it.
And our security is also completely interdependent with the continent of Europe. Two thousand years of British history, from the Roman invasion to the Battle of Britain, have taught us that. Each and every time we have tried to disengage from Europe, and wipe our hands of its problems, it has been a disaster for Britain and a tragedy for our continent.
So, as I say, we should approach all the decisions we now face about trade, about finance, about security, looking to forge the closest possible relationship with the rest of Europe consistent with being outside the EU.
We shouldn’t assume that there is an off-the-shelf arrangement that works for the second largest economy in Europe – I can’t see us consenting to the current arrangements around free movement of people that clearly caused such concern in the referendum.
Equally, I find some of the take-or-leave it bravado we hear from those who assume Europe has no option but to give us everything we want more than a little naive.
We need to be realistic that this is a two-way relationship: that Britain cannot expect to maintain all the benefits that came from EU membership without incurring any of the costs or the obligations.
There will have to be compromise.
Above all, we need to resist the false logic that leads from exiting the EU to exiting all forms of European co-operation – and that values the dangerous purity of splendid isolation over the practical necessity of co-operation in the real world.
Brexit won a majority. Hard Brexit did not.
The mainstream majority in our country do not want to be governed from the extremes.
The same principles of co-operation and engagement that drives Britain’s relationship with Europe should guide our approach to the global challenges we all face.
We have to confront the false prophets who – as in previous generations – tell people that their concerns about security in the world can be addressed by retreating from it.
None of the huge issues confronting our generation – from terrorism to mass migration, from disease to climate change – can be tackled alone.
Indeed, if we fail to intervene and solve these problems together, then the insecurity people feel will only increase.
I was elected to the House of Commons in June 2001, a Conservative opposition MP in a Parliament where the Labour Party had just won re-election with a large majority.
As new MPs, we were told to expect a relentless focus on domestic priorities. Instead, those early years in Parliament were dominated by conflict abroad.
The savage attacks in New York and Washington on 9/11; the overthrow of the Taliban government in Afghanistan; the invasion of Iraq.
For my political generation, the high price of intervention became painfully clear.
The loss of life. The sacrifice of our armed forces. The budgetary cost.
The shock and awe of well-planned invasions giving way to the long, messy chaos of insurgencies.
And the deep divisions this brought to our society at home. The marches. The bitterness in our politics.
Long gone is the confidence that Tony Blair expressed here in Chicago as Prime Minister back in 1999, when he discarded the old Westphalian settlement of non-intervention – and confidently set out new principles that would govern the right of the international community to intervene in the affairs of a sovereign state.
In its place is a resignation that it is never worth getting involved – that the price of intervention is never worth paying.
That, sadly, is the conclusion our western democracies have come to after a decade or more of difficult, divisive, drawn-out conflict in Afghanistan, Iraq and more latterly, Libya.
Last week, the Foreign Affairs Committee of the House of Commons censured David Cameron for Britain’s involvement in Libya.
They tell a simplistic story. A rushed intervention. A failure to understand the complexity of the country. The removal of the strong leader who held the country together – however brutally. The chaos that ensues. The armed militias. The terrorism. Five years on, we’re still trying to bring stability to Libya.
But we forget: Libya wasn’t stable five years ago – that’s why we intervened.
And ask yourself the question; what if we hadn’t intervened?
I sat on the British National Security Council that saw the satellite imagery of Colonel Gaddafi’s forces advancing up the coast road from Tripoli to Benghazi to crush the uprising there.
There was no doubt that if British, French and American forces did not intervene right away then a massacre would take place in the following days. Many, many thousands of people would have died.
Benghazi would have been added to the list, alongside Srebrenica and Rwanda, of places where the west had shamefully stood aside – and where our failure to intervene still haunts us today.
And what confidence do we have that Libya would not still have descended further into civil war and chaos? After all, we chose not to intervene in strength in Syria.
We made a conscious decision not to intervene in 2011, when Britain, America and our allies could have tried to alter the outcome of the emerging civil war there by forcefully backing the more moderate elements of the opposition.
There was a plan put forward to do that. But collectively the West chose not to take it up – and we settled on something much weaker.
And we chose not to intervene again in 2013, when Assad crossed the red line we had drawn and used chemical weapons. The vote of the House of Commons against military action was the single most depressing moment of my time to date in Parliament.
I don’t know whether these interventions in Syria would have worked. I am sure they would have been very messy and difficult. Clinical interventions and text book nation building exist only in newspaper columns.
But I do know what has happened in Syria while we chose not to intervene decisively. Hundreds of thousands killed. Millions displaced. Neighbouring countries destabilised. The taboo on the use of chemical weapons broken. The emergence of a terrorist state. Russia back as a major player in the Middle East. And a refugee crisis that has fuelled the rise of extremism across Europe.
Yes, my political generation knows the cost of intervention – but we are also beginning to understand the cost of not intervening. It doesn’t make our countries more secure.
It doesn’t help address the fears of those who feel we invite the problems of the world on our shoulders – it makes those problems worse.
Those of us who are internationalists – who believe that co-operation is better than isolation – need to rediscover our self-confidence and make our case.
What is at stake is the kind of nations we want to be. Let me speak about my own.
In the last few years, with David Cameron, we took some deliberate and expensive decisions that were controversial and which required constraints on spending elsewhere in the budget.
I announced that we will continue to spend two percent of our national income on defence – meeting alongside US and unlike almost everyone else, our NATO obligation to do so.
That rising defence budget is being spent on the latest generation of military equipment, from aircraft carriers to submarines to fast jets, that will enable Britain to be one of the few countries to be able to project hard power abroad.
We have also decided to be one of the very few countries in the world to meet our UN obligation to spend 0.7% of our national income on international development – and that rising aid budget has put Britain not just at the forefront of the fight to eliminate diseases like malaria, but also central to the efforts to bring stability and support to Syria’s neighbours.
Indeed, Britain is unique among the major western nations in meeting both the NATO commitment on defence and our UN commitment on aid. Why did the government I was part of choose to do that at a time when resources are scarce?
It is more than just an expression of what we want our country to be – and it is a practical solution to the disorder that we see in the world, and the insecurity and the anger that is breeding at home.
That aid budget is not just meeting a moral obligation to the world’s poorest. It is a tool in responding to the refugee crisis that is destabilising Europe.
That defence budget is not just about protecting Britain’s own shores. It enables our new Prime Minister to deploy additional forces this week into Somalia to tackle terrorism there before it visits us here.
Together aid and defence add to Britain’s influence and reach, alongside our diplomatic network, our intelligence agencies, our prominent role in international bodies, our language, our culture, our science and – after this Olympic summer – our sporting prowess.
Mind you, I see the Chicago Cubs are on roll.
The Economist Magazine has ranked Britain number one in the world for the impact of its soft power. Our hard power makes us the only ally that can fight alongside the US in strength.
Together that concentration of power makes our country safer and makes our world more secure than it would otherwise be.
For if we, Britain, are not a nation prepared to intervene to secure free trade and international order and the rule of law, why should we expect anyone else to be?
If we don’t make that argument to our population than we cannot expect others to.
And what applies to Britain, applies to our European allies and to the United States as well. We were present at the creation of the post-war order. We must take care not to allow its destruction.
If we leave a vacuum of leadership in the world, then others who do not share our values will fill it.
If we don’t make an effort to co-opt new rising powers like China to the world order we created, and make them feel part of it, then we face the prospect of disintegration and confrontation.
If we, the countries that have championed world trade rules and open markets, do not continue to advance the case for trade across the Pacific and Atlantic, then who will?
If we don’t have a plan for global order, then we will fall mercy to other people’s plans.
This is a deeply unsettling time in so many western democracies.
Barriers are being erected.
Free trade is in retreat.
A voice is being given to the extremes.
That is not, in the end, going to help people who feel insecure and feel like they are losing control – it will make that insecurity and powerlessness very much worse.
We shouldn’t be afraid to say so.
We should fight fiercely for our values – for the co-operation, free markets and international institutions that have sustained our peace and prosperity, and can continue to do so.
As they say here in Wrigley Field, it’s time to step up to the plate.
Below is the text of the statement made by George Osborne, the Chancellor of the Exchequer, and co-signed by leaders of numerous banks on 5 July 2016.
While we are realistic about the economic challenge facing the country after the referendum result; we are reassured that collectively we can rise to it.
The last time Britain faced an economic shock the banks were at the heart of the problem.
Thanks to the hard work of rebuilding the banks, making them stronger and safer, and the arrival of new challenger banks – banks and building societies are now part of the solution.
The government gave the Bank of England new counter-cyclical capital buffer powers to support lending in the financial system in the good times and bad.
The independent FPC of the Bank of England have today used those powers.
Now the UK’s main lenders, meeting with the Chancellor this morning, have agreed to make the extra capital available to support lending to UK businesses and households in this challenging time.
The Chancellor called for a joint national effort to meet the economic challenge. Today we see that effort take place.
Signatories and attendees
Chancellor of the Exchequer, George Osborne
Economic Secretary to the Treasury, Harriett Baldwin
Ms Jayne-Anne Gadhia (CEO, Virgin Money)
Baroness Vadera (Chairman, Santander UK)
Mr Douglas Flint (Chairman, HSBC)
Mr Craig Donaldson (CEO, Metro Bank)
Sir Howard Davies (Chairman, The Royal Bank of Scotland Group)
Mr David Roberts (Chairman, Nationwide Building Society)
Mr John McFarlane (Chairman, Barclays)
Mr Alan Dickinson (Non-Executive Director, Lloyds Banking Group)
Below is the text of the speech made by George Osborne, the Chancellor of the Exchequer, on 27 June 2016.
Today I want to reassure the British people, and the global community, that Britain is ready to confront what the future holds for us from a position of strength.
That is because in the last six years the government and the British people have worked hard to rebuild the British economy.
We have worked systematically through a plan that today means Britain has the strongest major advanced economy in the world.
Growth has been robust.
The employment rate is at a record high.
The capital requirements for banks are ten times what they were.
And the budget deficit has been brought down from 11% of national income, and was forecast to be below 3% this year.
I said we had to fix the roof so that we were prepared for whatever the future held.
Thank goodness we did.
As a result, our economy is about as strong as it could be to confront the challenge our country now faces.
That challenge is clear.
On Thursday, the people of the United Kingdom voted to leave the European Union.
That is not the outcome that I wanted or that I threw everything into campaigning for.
But Parliament agreed that there are issues of such constitutional significance that they cannot solely be left to politicians, and must be determined by the people in a referendum.
Now the people have spoken and we, in this democracy, must all accept that result and deliver on their instructions.
I don’t resile from any of the concerns I expressed during the campaign, but I fully accept the result of the referendum and will do everything I can to make it work for Britain.
It is inevitable, after Thursday’s vote, that Britain’s economy is going to have to adjust to the new situation we find ourselves in.
In the analysis that the Treasury and other independent organisations produced, three particular challenges were identified – and I want to say how we meet all three.
First, there is the volatility we have seen and are likely to continue to see in financial markets.
Those markets may not have been expecting the referendum result – but the Treasury, the Bank of England, and the Financial Conduct Authority have spent the last few months putting in place robust contingency plans for the immediate financial aftermath in the event of this result.
We and the PRA have worked systematically with each major financial institution in recent weeks to make sure they were ready to deal with the consequences of a vote to leave.
Swap lines were arranged in advance so the Bank of England is now able to lend in foreign currency if needed. As part of those plans, the Bank and we agreed that there would be an immediate statement on Friday morning from the Governor, Mark Carney.
As Mark made clear, the Bank of England stands ready to provide £250 billion of funds, through its normal facilities, to continue to support banks and the smooth functioning of markets.
And we discussed our co-ordinated response with other major economies in calls on Friday with the Finance Ministers and Central Bank Governors of the G7.
The Governor and I have been in regular touch with each other over the weekend – and I can say this this morning: we have further well-thought-through contingency plans if they are needed.
In the last 72 hours I have been in contact with fellow European finance ministers, central bank governors, the managing director of the IMF, the US Treasury Secretary and the Speaker of Congress, and the CEOs of some of our major financial institutions so that collectively we keep a close eye on developments.
It will not be plain sailing in the days ahead.
But let me be clear. You should not underestimate our resolve.
We were prepared for the unexpected.
We are equipped for whatever happens.
And we are determined that unlike eight years ago, Britain’s financial system will help our country deal with any shocks and dampen them – not contribute to those shocks or make them worse.
The second challenge our analysis identified in advance was the uncertainty that a vote to leave would bring in the coming months and beyond as Britain worked with its European allies to create a new relationship.
The Prime Minister has given us time as a country to decide what that relationship should be by delaying the decision to trigger the Article 50 procedure until there is a new Prime Minister in place for the autumn.
Only the UK can trigger Article 50, and in my judgement we should only do that when there is a clear view about what new arrangement we are seeking with our European neighbours.
In the meantime, and during the negotiations that will follow, there will be no change to people’s rights to travel and work, and to the way our goods and services are traded, or to the way our economy and financial system is regulated.
However, it is already evident that as a result of Thursday’s decision, some firms are continuing to pause their decisions to invest, or to hire people.
As I said before the referendum, this will have an impact on the economy and the public finances – and there will need to be action to address that.
Given the delay in triggering Article 50 and the Prime Minister’s decision to hand over to a successor, it is sensible that decisions on what that action should consist of should wait for the OBR to assess the economy in the autumn, and for the new Prime Minister to be in place.
But no one should doubt our resolve to maintain the fiscal stability we have delivered for this country. To all companies large and small I would say this: the British economy is fundamentally strong, we are highly competitive and we are open for business.
The third and final challenge I spoke of was that of ensuring that Britain was able to agree a long-term economic relationship with the rest of Europe that provided for the best possible terms of trade in goods and services.
Together, my colleagues in the government, the Conservative Party and in Parliament will have to determine what those terms should be – and we’ll have to negotiate with our European friends to agree them.
I intend to play an active part in that debate – for I want this great trading nation of ours to put in place the strongest possible economic links with our European neighbours, with our close friends in North America and the Commonwealth, and our important partners like China and India.
I do not want Britain to turn its back on Europe or the rest of the world.
We must bring unity of spirit and purpose and condemn hatred and division wherever we see it.
Britain is an open and tolerant country and I will fight with everything I have to keep it so.
Today I am completely focussed on the task in hand as Chancellor of the Exchequer to bring stability and reassurance.
In conclusion, the British people have given us their instructions.
There is much to do to make it work.
We start from a position of hard-won strength.
And whatever the undoubted challenges, my colleagues and I are determined to do the best for Britain.
Below is the text of the speech made by George Osborne, the Chancellor of the Exchequer, at B&Q in Southampton on 23 May 2016.
Prime Minister, thank you very much.
The Treasury has already published detailed analysis of what a vote to leave would do to Britain’s economy over the long term.
And the results showed that Britain would be permanently poorer to the tune of £4,300 per household – £4,300 each and every year.
That’s the long term bill for leaving the EU.
But what about the immediate impact on our economy? What will it mean next month, next year? And what will it mean for you?
Today the Treasury is publishing its detailed and rigorous analysis of the immediate impact of leaving the EU on growth, jobs, prices, wages, house prices and our nation’s finances.
And the conclusion is that all would be hit.
Why is that?
Well, first households and businesses will know that Britain is going to be poorer in the future, so they’ll start cutting back on spending now, and avoiding big investments.
And that has an effect on the economy now.
Second, leaving the EU creates a huge amount of uncertainty.
We’d have just two years to work out how to leave the EU; two years to find a new working relationship with our neighbours; two years to do trade deals with over 50 other non EU countries; two years to introduce a load of new regulations here at home.
In other words, two years at the very least of complete uncertainty – and probably more.
And what will British businesses be doing during those two years?
They will be watching and waiting nervously.
They will delay purchasing new machinery, put on hold making plans for new premises.
They won’t take new people on; some will let existing people go.
And what about families – how are they likely to respond?
Families will also be uncertain about what is coming next.
If you don’t know what’s going to happen to your job, your partner’s job, your pay or the fortunes of the firm you work for – it would make sense to delay spending on things.
People will put off trying to buy a home, or starting their own business.
Put together millions of individual decisions like that and there is real damage to the economy.
And then there’s the impact on financial markets – and we’ve all learnt to our cost during the financial crash how that can affect us all.
Markets would be volatile, banks would be more cautious, the value of things like shares would likely fall.
So stack all these things together…
the fact we’d be heading towards a poorer Britain,
the fact we’d be surrounded by uncertainty,
the fact the financial system would be volatile,
and it builds up to a profound economic shock if Britain leaves the EU.
The Treasury asked one of the country’s leading economists and a former Deputy Governor of the Bank of England, Professor Sir Charles Bean to review the work, and he concludes that it “provides reasonable estimates of the likely size of the short term impact of a vote to leave on the UK economy”.
So what are the numbers from the Treasury analysis?
Economists looked at two scenarios – one where Britain experiences a shock, the second where it’s a severe shock. Under both scenarios here are the results.
This is what happens if Britain leaves: the economy shrinks,
the value of the pound falls,
inflation rises,
unemployment rises,
real wages are hit,
so too are house prices,
and as a result – government borrowing goes up.
The central conclusions of today’s Treasury analysis are clear – a vote to leave will push our economy into a recession.
Within two years the size of our economy – our GDP – would be at least 3% smaller as a result of leaving the EU – and it could be as much as 6% smaller.
We’d have a year of negative growth – that’s a recession.
The pound would fall in value – by between 12% and 15%.
That doesn’t just mean it’s more expensive when you have a holiday abroad.
It means everything we import becomes more expensive, which increases inflation and hits family budgets.
Within a year of the Referendum, inflation would be over 2% higher.
And let’s be clear who that would hit the most: the lower income families who spend the largest proportion of their income on things like food and energy bills.
In the financial markets, tougher conditions would lead to higher mortgage costs for families.
By 2018 house prices would be hit by at least 10% and as much as 18%.
So that’s what it means to vote to leave the EU.
Incomes fall.
Mortgage rates go up.
And the value of the family home falls too.
Behind all this – what people can afford to buy, where they can afford to live – are people’s jobs.
And so I want to talk to you about the impact on jobs too.
The Treasury’s analysis published today finds that a direct consequence of a vote to leave the EU would be significant job losses across the UK.
Within two years, at least half a million jobs would be lost.
That’s 80,000 jobs in the Midlands.
Over 100,000 jobs across the North.
Over 40,000 in Scotland; over 20,000 in Wales; almost 15,000 in Northern Ireland.
In London over 70,000 jobs would be lost.
Here across the South, almost 120,000 jobs would go.
And that’s the lower end of the estimates – across Britain as many as 820,000 jobs could be lost.
As always, it would be young people leaving school and college, and those already in insecure work who would be hit hardest.
Youth unemployment would rise by over 10%.
And for those that stay in work, wages will be hit too as firms see their profits fall.
The Treasury’s analysis finds that real wages will fall by almost 3% in the first two years compared to where they’d be if we remain in the EU.
To put it in perspective – that’s a pay cut worth almost £800 a year to someone working full time on the average wage.
The analysis today is clear: the uncertainty that would be caused by a vote to leave would put the brakes on investment, would cost over half a million people in our country jobs, and would cut people’s wages too.
And of course, all of this would have a big impact on the nation’s finances and how much we have to spend on things we value like our NHS and schools.
If we vote to leave, evidence shows that the deficit would be higher than it would be if we remain.
The borrowing bill for leaving the EU would be between £24 billion to £39 billion a year.
Let me end by saying this: it’s only been 8 years since Britain entered the deepest recession our country has seen since the Second World War.
Every part of our country suffered.
The British people have worked so hard to get our country back on track.
Do we want to throw it all away?
With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession?
Does Britain really want this DIY recession?
Because that’s what the evidence shows we’ll get if we vote to leave the EU.
And to those who say we should vote to leave I’d say this: you might think the economic shock is a price worth paying.
But it’s not your wages that will be hit, it’s not your livelihoods that will go, it’s not you who’ll struggle to pay the bills.
It’s the working people of Britain who will pay the price if we leave the EU.
None of this needs to happen if we vote to remain.
Yes, we’ve got improvements to make to the EU – but we know what they are and we’re clear about what the future holds.
If we remain, major British car manufacturers will go on selling hundreds of thousands of cars to Europe tariff-free. If we remain, British farmers will go on selling their beef and lamb to Europe tariff-free.
If we remain, British building firms will go on building homes, and people will have the confidence to do-up their own homes and shop with companies like yours.
And if we remain, our economy won’t lose half a million jobs, but instead we’ll create more than a million jobs over the coming years.
That is the brighter future on offer for our country.
We’ve spent 6 years dealing with what happens when recession hits this country – we’ve got one month to make sure we don’t do it to ourselves all over again.
One month to avoid a DIY recession.
The Treasury analysis shows Britain will be stronger, safer and better off if we vote to remain in the EU on 23 June.
Below is the text of the speech made by George Osborne, the Chancellor of the Exchequer, on 13 May 2016.
I’m delighted to welcome Christine Lagarde and her team to the Treasury this morning, so they can outline the findings of the IMF’s annual Article 4 assessment of the British economy.
The Article 4 assessment plays an important role in providing independent scrutiny of the prospects for our economy, and today the IMF report on a British economy that is growing, with low unemployment and rising wages.
We’ve got that growing economy thanks to the hard work of the British people and because we’ve stuck to our long term plan.
But there are many challenges we need to address if we are going to go on raising living standards, and the IMF help us to identify them.
I can say that we accept the broad conclusions of their report today.
First, they urge us to go on repairing the public finances.
We’ve made huge progress in reducing the record deficit of more than 10% we inherited to around 3% this year, but it is still too high.
I welcome the IMF’s endorsement of our plan to continue to bring stability to our finances – and their acknowledgment that the pace of additional consolidation set out at the recent Budget was, in their words, “appropriate”.
Second, the IMF remind us of the big challenge we, like other advanced economies, face on productivity growth.
This is a challenge we acknowledge, and one we’ve already taken steps to tackle – with initiatives from the apprenticeship levy to the National Infrastructure Commission – and in next week’s Queen’s Speech there will be a number of major measures to do even more to make Britain’s economy fit for the modern age.
The third challenge is the current account.
A wide current account deficit leaves the UK reliant on financing from abroad, and more exposed to economic risks than we’d like.
We’re taking steps to reduce it, including mobilising the whole government behind our exports strategy, and as the IMF has said, our plan to repair the public finances will support a gradual narrowing of the current account.
This year’s Article IV mission comes alongside the IMF’s Financial Sector Assessment Program of the UK, which is conducted once every five years.
This is an innovation since the financial crisis that ensures major financial centres are subject to international scrutiny.
I’m glad the IMF acknowledge the enormous progress we’ve made under this government to make our financial sector stronger, to improve dramatically our financial supervision, and to ensure Britain is better prepared for any financial shocks.
So in the view of the IMF, the UK economy is set on a positive course: with rising incomes, more jobs and a sound financial system.
That is what is on offer if we remain in the EU.
For the IMF have been in town for this Article 4 as Britain prepares to take what the Fund describe as a “momentous decision” on whether to remain in the European Union, or leave.
The IMF are clear that even the prospect of a leave vote is already having an impact on investment and hiring decisions, and weighing on economic growth in the UK.
But the Fund are also clear that this could be a mere taste of things to come if we vote to leave.
The IMF today finds that a vote to leave would cause a “protracted period of heightened uncertainty”, “financial market volatility” and a “hit to output” – in other words, a hit to growth.
They say that the long term impact on incomes in Britain would “likely be negative and substantial,” and they note that the market reaction to these adverse economic effects could entail:
a “sudden stop of investment inflows into key sectors”
“sharp drops” in house prices
and “sharp drops” in equity or share prices too
and the costs of borrowing for households and businesses could rise
And the IMF also put to rest the fallacy that’s been peddled by those who say Britain will have more money for public services if we’re not paying into the EU budget.
The IMF are very clear today: the hit to growth we could expect from a vote to leave would cost our public finances more than the amount we’d gain from no longer contributing to the EU budget.
Put simply, the IMF says a vote to leave costs us money.
We’d have less to spend on public services like schools and the NHS if we leave the EU.
Ahead of this historic referendum the British people have been clear: they want facts, and they want credible independent opinion to help inform their decision.
Today the independent IMF reinforce the conclusions of the independent Bank of England.
These are the facts that the British people need to hear. If we vote to leave, British families will be poorer and Britain will be poorer. Incomes would be hit, businesses would suffer, and we’d have less money to spend.
That’s if we vote to leave. But there’s a positive future for Britain on offer if we stay in the EU. Our economy is expected to keep on growing, businesses will keep creating jobs and families will benefit from rising wages and living standards.
Let’s not put all that at risk with a leap in the dark.