Conservative Diary

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World finance ministers back George Osborne's deficit reduction policy

George Osborne is on his way back from South Korea where he has been meeting other finance ministers from the G20. The G20 was one of Gordon Brown's favoured fora and I'm not sure he will be pleased to read the communique emerging from the meeting. It gives support to the most contentious decision of Britain's new Chancellor of the Exchequer.

The communique (full text here) backs Mr Osborne on early deficit reduction:

"Those countries with serious fiscal challenges need to accelerate the pace of consolidation. We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions."

According to Reuters, Mr Osborne told a news conference: "I think we've achieved a significant success by getting the endorsement of the G20 for the fiscal position we adopted just three weeks ago."

The Chancellor used his trip to the Far East - his first abroad since entering the Treasury - to visit Beijing. He said that more exports to China were a key part of the Coalition government's aim to create a more balanced UK economy (from Guardian report):

"If you are looking at Britain and saying where is growth going to come from, I think exports to an economy the size of China is one place we should be looking. As it moves from being an nation of manufacturers to a nation of consumers, there is an opportunity for us to sell to China the kind of services and high technology products we excel in."

At present only 2% of UK exports go to China.

The ambition to boost manufacturing is a worthy one but manufacturing needs cheap, reliable energy. The Coalition's expensive investment in renewable energy sources won't help goods exporters.

Tim Montgomerie


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