UK Example for Euro Periphery Countries: Osborne
Europe should help countries that are in financial trouble, but these countries need to show that they are tackling their deficit problems themselves, like Britain has done, UK Chancellor of the Exchequer George Osborne told CNBC in an interview Tuesday.
"Of course we have got to assist countries that get into trouble and that’s why the European Union and the IMF have come together to help Ireland," Osborne said after a ceremony in the City of London where he opened the London Stock Exchange.
"That’s why we’re putting together a package together for Portugal. So I think it’s important that the international community is able to help. But there is a quid-pro-quo," he added. "That is that these countries themselves need to tackle their deficits, need to tackle their long term competitiveness issues, and that’s what Ireland is doing… and in Ireland’s case, also dealing with its banking system."
The UK is an example of a country coming forward with a credible plan, according to Osborne.
"I would say that the UK lesson is that you can earn market credibility. That actually by your domestic actions you can earn confidence in the international community," he said.
"When I became Finance minister a year ago, we have one of the highest budget deficits in the world. But because we’ve set out credible plan to deal with that deficit, now we’ve actually got interest rates that are closer to Germany’s. So we have earned international credibly, I think we are quite a good example of how countries can do that," Osborne added.
Talk about Greece wanting to leave the euro zone has intensified and brought fresh nervousness in the markets Monday, when S&P also downgraded the country's ratingfurther in the "junk" category.
Osborne said that there is currently an assessment of the progress made by Greece carried out by the European Commission and the European Central Bank and that the results of the assessment must be taken into account before a decision is taken.
"That's where we are in this process, everything else is speculation," he said.
For the UK, Osborne reiterated that the recovery would be choppy but sustained.
"The most recent employment data actually shows a fall in unemployment which is a good thing, and all the Markit surveys are all very positive at the moment," he said. "Now that doesn’t mean that it isn’t choppy, but it is growing, the British economy. And at the same time, as I said, the credible deficit plan is earning for us much lower market interest rates."
He did not announce any more austerity measures, saying that a two-year freeze on public salaries was already on place together with tax and spending measures that aim to deal with the deficit and make Britain more competitive.
"And at the same time as putting in place a package to deal with the deficit, we are very aggressively cutting our corporation tax, making our entrepreneurial tax system more attractive, investing in education and so on and so forth," Osborne said.
"I think people look at the UK and they see a country that has not only got its act together on debt, but is also aggressively pursuing business in the world," he added.
- Ee Sing Wong, Supervising Producer CNBC EMEA, contributed to this report.