George Osborne infuriated union leaders on Friday after defending his economic track record and urging eurozone countries to follow Britain’s economic model.
The chancellor cited France and Italy as being in need of structural reform as veteran investor George Soros clashed with Germany’s finance minister Wolfgang Schäuble over the pace of reform in the eurozone.
Making his first public appearance at the four day meeting in the Alpine resort, Osborne said the move by the European Central Bank to pump €1.1tn into eurozone economies was necessary but not sufficient on its own to bolster the 19-nation bloc.
“We want to see this accompanied by clear plans to make the European continent more competitive, to back business in Europe, to create jobs, to make sure public finances are in order,” Osborne said.
Just four months ahead of election on 7 May, Osborne defended his austerity policies as he said he had halved the budget deficit – as a percentage of income – since taking office in five years ago.
He said he hoped “the public will see the progress we’ve made” in the run up to the election and said “all of that would be lost if you started turning on the spending taps”.
But Frances O’Grady, general secretary of the TUC, attacked Osborne for complacency. “His remarks are notable for what he left out, rather than what he said.
“He failed to address the plain need for investment to shore up the real economy or to create the skilled well-paid jobs young people in particular need. And he did not even mention the need to ensure that the rewards of growth are shared more fairly if Britain’s economy is to become more sustainable,” she said.
The Conservatives have pledged to hold a referendum on EU membership if elected in four months time and Osborne said he supported remaining part of the union provided treaty changes could be agreed.
It was not clear if he participated in a show of hands of delegates on whether the UK should remain in the EU. The audience appeared to back the UK remaining.
Soros, known for breaking the Bank of England on Black Wednesday, warned of upcoming volatility in the currency markets and set out concerns that the move by the ECB to embark on quantitatve easing would back fire.
“My concern is that it will make the divergence between rich and poor greater than it already is because it will benefit the owners of assets, wages will remain under pressure,” Soros said.
He rankled Schäuble by saying Germany would benefit – and be able to spend more on infrastructure projects – if the EU used its triple AAA rating to borrow on the financial markets.
Soros warned of political instability caused by a resurgent Russia. “Europe doesn’t behave like an association of countries that is under attack, that is one of the major uncertainties,” Soros said.
Schäauble also refuted a suggestion that Germany had set out plans to allow Greece – which goes to the polls on Sunday – to leave the single currency. “We don’t model any exit. We are in favour of the EU staying together,” he said.
