CNBC News Releases

CNBC Interview: Steve Sedgwick Interviews George Osborne, UK Chancellor of the Exchequer


Following are excerpts from the unofficial transcript of a CNBC interview with George Osborne, UK Chancellor of the Exchequer, aired on Monday 7th September.

I think it's been a pretty useful G20 actually because it's been a moment to take stock after quite a turbulent summer with what's been happening in Asian financial markets. Take an assessment of the Euro Zone crisis now that Greece has calmed down a bit. So it's been quite a good moment to take stock and look the mood is – you know –we're not that pessimistic. There are some good things going on in the global economy but it's not as strong as we'd like and there are plenty of risks out there. So I take away from it a determination in the UK to go on putting our own house in order.

CNBC: Brisbane was just a load of grandiose promises from what I can see given what's happened since then. Tony Abbott's presidency offered 2 trillion dollars extra, 2 per cent extra growth, hundreds of millions of jobs and 800 new measures. It's just not being delivered, is it?

Well people are committing to those specific action plans they put forward under the Australian G20, but look what this summit is really for is preparing for the big leaders' summit which will come here in Turkey in November and I think there is some positive work streams on youth unemployment for example, something the G20 hasn't previously really addressed specifically. We are at this meeting. And look as I say, that's also because of all that's been going on.

The fall in the oil price, you've heard from some of the oil producers here, like Saudi Arabia, about what that means for them. You've heard from the Chinese about their stock market and the turbulence over the summer. You've heard from the Americans about monetary policy. You know this is… these are the key decisions which are going to affect the global economy in the coming months, and it's good to have them all heard around the table.

CNBC: You're not the central bank governor but Christina Lagarde has said developed nations should be very mindful about raising rates. I think she was talking about Janet Yellen but equally so, is the UK ready to raise rates? You talk about our strong economy, relatively robust economy, but the fact of the matter is she's warning against raising rates.

Well look that's a decision in our country for an independent central bank and so I'm not going to stray into that territory. I think what's true is that as and when advanced economies, like the US like the UK and the like start to exit from very loose monetary policy – whenever that happens, and independent central banks will make that judgement – we've got to make sure that the emerging economies are going to be able to cope with the spill overs that inevitably happen when that occurs. Now, of course it's been well sign-posted. But what's of interest in this meeting – having been to five years of these G20s – five years ago it was really the US and the UK who were in the spotlight, problems in our economies. We're now two bright spots in the world economy. Then we've had of course the on-going trauma of the Euro Zone crisis, not ended, but at least calmer than it was a few months ago. Now under the microscope are the emerging economies and their ability to deal with events as they unfold over the next couple of years.

CNBC: There are rumours that the Japanese are really disappointed with what the Chinese came to the table with and didn't give clarity on reform, didn't give clarity on purpose going forward and how they are going to get to more of a market economy and get themselves out of what appears to be grave concerns about the slowdown. Do you get the same impressions? Are you pleased or disappointed with what the Chinese offered?

Well I've had good discussions myself here with the Chinese, the Chinese finance minister, the Chinese central bank governor. But let's take a step back, China's made a massive contribution to global growth over recent years. There's clearly been a lot of turbulence and volatility on the stock market and of course they themselves are looking at what they've done right and what they've done wrong about that.

We've got to be alert to whether there are going to be spill overs, as they're called, into other markets and of course we're in a connected world so that's why we've got to be vigilant. But the big picture here is China is trying to move from an investment-driven economy to a consumption-led economy – that's a good thing, not just for China but for the rest of the world. So I think we should be encouraging the pace of reform in China rather than standing in its way.

CNBC: But has it made you and the prime minister reassess your policy of engaging more aggressively with fast-growing emerging markets because of the potential downside when we see events like we have over the last couple of weeks?

Well look, if you take the long view here, China not only is a massive source of growth in the world economy it's going to be an increasing source of growth over the coming decades. It's absolutely essential that Britain engages not just with China but with India, Indonesia, the prime minister has just been in Malaysia, Vietnam, Brazil and the like. You know, of course you're going to have periods when they're not growing as fast as they were. That's not a reason to disengage. I would argue quite the reverse. You know we need to be engaged in these emerging economies so their financial markets are deeper and they're better connected to the more advanced markets you see in the West.

CNBC: Chancellor, Nigel Farage has said it's a catastrophic error allowing free movement of people around Europe. He's referring of course to some of the consequences of the refugee crisis, the migrant crisis as well. Is this going to add more fuel to euro sceptics in the United Kingdom who want to be out of the EU? The current crisis we're seeing that's disseminating from Syria and elsewhere.

Well I think it's important we separate the issues. You know there is an issue around the free movement of European citizens to come to the UK and the concern we have is that they come to claim benefits. That's one of the abuses we want to stop. And that's part of our renegotiation. Separate to that is the tragedy of the refugee crisis brought about by a combination of the Assad government in Syria and the ISIL terrorists in that country. And that's a massive challenge for Europe of course, you can see the numbers, you can see the pictures on your TV screens.

Now, what's the response to that? I think it's got to be pretty comprehensive. Yes of course you've got to offer asylum to people who are fleeing persecution. Britain has always done that and as the prime minister has indicated we're going to take thousands more. You've got to provide aid to help make sure the refugee camps on the borders of Syria are there ready to cope and a place where people don't have to move on from. And we're going to be providing extra money, a billion pounds in total Britain has provided. You've got to go after the criminal gangs that are smuggling these people across Europe and in some cases leading to their deaths. And you've got to have a solution to the Syrian conflict. Now that of course is not easy, or else it would have been found. But we've got to engage in finding a way to bring some peace and stability to that country. Now, I think you need to do all of those things. You can't just do one of them. That's what Britain's proposing and that's a comprehensive solution.

CNBC: Finally chancellor, how are your negotiations going with European partners. You are seen as the lead negotiator in renegotiating the terms of the UK's EU membership as well. How are those negations going? Do you fear actually that it's not going as well as you would have hoped it would have done?

No, we're having very good preliminary discussions. The prime minister has just been in Spain and Portugal. I was in the Scandinavian countries and Finland just the other day as well. Look across Europe there's a recognition that Europe is not working as well as we'd like it to work for all of Europe's member states. You know there aren't enough jobs, we haven't seen enough prosperity in these countries and we need to do more to reform that. There's widespread recognition that we need to do more to create a lasting, stable relationship between those who are in the Euro Zone and those who are outside the Euro Zone. And of course there's also many countries, a variation of some of these issues we face in Britain around the free movement of people. So I see quite a lot of willingness to engage with the UK and make this work for the whole of the EU.