British Finance Minister George Osborne abandons plans to eliminate budget deficit by 2020

July 2, 2016 9:00 am

British Chancellor of the Exchequer George Osborne arrives in Downing Street in central London on June 28, 2016. (AFP photo)

British Finance Minister
George Osborne has abandoned the government’s promise to eliminate the
budget deficit by 2020, sparking forecasts of more austerity pain
following the vote.

Giving a speech in Manchester
on Friday, Osborne said the is showing “clear signs” of shock
following the vote to leave the .
The Chancellor of the Exchequer said the austerity measures would continue for a longer period.
“The
referendum is expected to produce a significant negative economic shock
to our economy. How we respond will determine the impact on jobs and
growth,” Osborne said.
“We must provide fiscal credibility,
continuing to be tough on the deficit while being realistic about
achieving a surplus by the end of the decade,” he added.
Osborne
first promised to return the country’s budget to a surplus by 2020 at
the Conservative Party conference in 2013 and it became policy in the
2015 budget.
On Monday, the American financial services company,
Standard and Poor’s, downgraded Britain’s credit rating by two notches,
from AAA to AA, a humiliating blow for the country and one that could
cost its economy.
S&P was the last of the big three ratings
agencies to have a blue-chip rating on the ’s credit-worthiness.
Moody’s, which stripped the UK of its top-notch rating following the
austerity cuts of 2013, said last week it might further downgrade its
credit rating.
Britain’s vote to exit the , known as Brexit, has plunged global markets into turmoil.
In
the June 23 referendum, some 52 percent of British voters opted to
leave the EU, while roughly 48 percent of the people voted to stay in
the union.
The British departure has triggered concerns that other
EU nations may follow, challenging the political fabric of an alliance
that has been constructed among nearly thirty very different countries.
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