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Britain's Osborne defends austerity policies

Aug 11 2011 18:12 Sapa

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London - British finance minister George Osborne on Thursday defended his government's austerity policies, but admitted that recovery would be longer than hoped amid global financial market turmoil over debt.

Osborne, addressing lawmakers after parliament was recalled early to debate the recent rioting, said that his deficit-slashing measures had made Britain a "safe haven" for investors - but it was not immune to the international "storm".

The Conservative-Liberal Democrat coalition government, which took office last year, has sought to axe public spending and hike taxes in order to slash a record deficit and preserve the nation's top-level AAA credit rating.

"I believe that events around the world completely vindicate the decisions of this coalition government from the day it took office to get ahead of the curve and deal with this country’s record deficit," Osborne said Thursday.

"While other countries wrestled with paralysed political systems, our coalition government united behind the swift and decisive action."

He added: "These bold steps have made Britain that safe haven in the sovereign debt storm."

Financial markets have suffered dizzying losses in recent days and weeks amid mounting concern that the eurozone debt crisis and weak US economy could help push the world back into recession.

The British government had said last weekend that its austerity measures had been "vindicated" by Standard & Poor's move to slash Washington's top AAA credit rating.

"It is not hard to identify the recent events that have triggered the latest market falls," Osborne added on Thursday.

"There has been the weak economic data from the US and the historic downgrade of that country's credit rating.

"And the crisis of confidence in the ability of Eurozone countries to pay their debts has spread from the periphery to major economies like Italy and Spain.

"But these events did not come out of the blue. They all have the same root cause. Debt."

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