UK’s Osborne says strong US economy good for the world

George Osborne - Chancellor of the Exchequer

A strong U.S. economy is in both Asia’s and the world’s interest, Chancellor George Osborne said on Wednesday in a speech in Hong Kong, seemingly reaffirming the need for U.S. quantitative easing

Osborne declined to take a clear position on the U.S.’s ultra-loose monetary policy, which has drawn sniping from China, Brazil and other emerging economies who say it will unleash speculative money that leads to inflated asset bubbles and strengthened currencies.

But when asked how the U.K. saw U.S. quantitative easing — just before a highly-anticipated G20 leaders summit in Seoul aimed at easing global economic imbalances — George Osborne stressed the need for a strong U.S. economy, echoing Washington’s view that monetary easing is critical to kick-starting the American economy.

“Lots of people have been quite ready to criticise the U.S. on its monetary policy in the past few days. I would just make this observation; it’s in everyone’s interests that the U.S. economy gets motoring again … that is of enormous importance for Asia, it’s of enormous importance to Europe as well,” he said.

“For all the problems in the U.S. … don’t underestimate one of the most dynamic economies the world has ever seen, and I hope like everyone else that the U.S. economy is going to be back firing on all cylinders.”

Osborne, who met with Chinese officials in Beijing ahead of the G20 summit in South Korea, called on countries to resist protectionism in all its forms and to reduce trade barriers.

He has also said the G20 meetings need to bolster multilateral cooperation to reduce economic imbalances.

Chinese officials have been increasingly blunt in their criticism of the loose monetary policies of the United States, warning that Washington could destabilise the global economy and inflate asset bubbles.

When asked to what extent a strong Chinese currency had contributed to global economic imbalances, Osborne sidestepped the issue and said the underlying causes were more complex.

“The imbalance issue is a much broader issue and if you just reduce it to the level of currencies, I think you are missing a much broader economic argument here which is how do we get surplus and deficit countries to work together to try and reduce the imbalances.”

On the longer term trend of the internationalisation of China’s currency, the yuan, Osborne said London was interested in tapping new growth opportunities as Beijing leans increasingly on the financial hub of Hong Kong as an offshore yuan settlement centre.

“London has a great role as a partner of Hong Kong in developing new Asian business, including the internationalisation of the renminbi. I think there is a massive opportunity.”

“This is a potentially very, very substantial new market for London and for Hong Kong as partners.”
Source: Reuters

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