George Osborne: Leadership key to recovery

Osborne departs 11 Downing Street yesterday (EPA)

Political leadership and courage are both needed to help achieve a global economic recovery, the Chancellor has said.

Co-authoring a comment piece in today's Financial Times, George Osborne said the world faced a "crisis of confidence" amid the "prolonged" recovery from the global financial problems.

He said: "The more serious malaise today is the lack of confidence in efforts by governments to address the structural problems that underpin weak growth, high unemployment and unsustainable fiscal balance sheets."

Writing alongside Tharman Shanmugaratnam, deputy prime minister and finance minister of Singapore, Mr Osborne said the biggest barriers to reform were political, not economic and required a "collective sense of reality".

He said: "Hard decisions on spending, entitlements and taxes in countries with large budget deficits are unavoidable.

"Consolidation must be accompanied by targeted and fiscally sustainable policies to spur job creation, plus training and private investments to lift each economy's potential to grow and meet its people's aspirations."

Mr Osborne said America played "an especially important role" in restoring confidence.

Referring to the eurozone, he said it needed to "demonstrate commitment to greater fiscal integration and governance arrangements that avoid moral hazard and entrench fiscal responsibility".

The Chancellor added greater political resolve should be employed to strengthen bank balance sheets on a "sustainable basis", with progress on financial regulation co-ordinated internationally.

He said: "Credible fiscal plans and stronger banks must be matched by more progress on global rebalancing."

Faster growth, he said, would be sustainable only with structural reforms to improve competitiveness.

The article was also co-authored with Jim Flaherty, Canadian finance minister; Pravin Gordhan, South African finance minister and Wayne Swan, deputy prime minister and treasurer of Australia.

PA