UK economy turning corner: Osborne

George OsborneThe UK economy is "turning a corner", George Osborne will declare today in his most upbeat assessment yet about the country's prospects.

In a bid to capitalise on a slew of positive signals, the Chancellor will hail " tentative signs of a balanced, broad based and sustainable recovery".
%VIRTUAL-SkimlinksPromo%He will stress that it is still "early stages" and that "many risks" remain - perhaps mindful of the controversy attached to predecessor Norman Lamont's 1991 "green shoots" speech.

And he will warn of the need to make "many billions" more in savings after the next election, cautioning Labour that "anyone who thinks those decisions can be ducked is not fit for Government".

But he will insist that the last few months - which have seen growth forecasts revised upwards amid a number of positive indicators - had "decisively ended" questions about his deficit-reduction strategy.

The cost of living - to which Labour switched the focus of attacks on the Government - would have risen higher still if the coalition had not stuck to its austerity measures, he will say.

Treasury officials believe the economy has entered the "next phase" of recovery - only months after economists feared the UK was set to plunge into an unprecedented triple-dip recession.

Mr Osborne is expected to say: "The plan is working, but the recovery is still in its early stages, plenty of risks remain, and more years of hard decisions lie ahead.

"Our economy is turning a corner, but we must not take anything for granted."

Labour accused the Chancellor of a "desperate attempt to rewrite history".

"Three wasted years of flatlining under George Osborne have left ordinary families worse off and caused long-term damage to our economy," shadow Treasury minister Chris Leslie said.

"This desperate attempt to rewrite history will not wash when on every test he set himself, this Chancellor's plan A has badly failed - on living standards, growth and the deficit."

Opposition leader Ed Miliband is expected to use his speech to the TUC conference to lambast the Chancellor for being "out of touch with ordinary families" by celebrating while they face the squeeze.

Mr Osborne has been buoyed by revised gross domestic product figures showing the UK economy grew by 0.7% in the second quarter of the year, with predictions it could reach 1% for the third quarter.

The respected OECD think-tank has almost doubled its prediction for UK growth this year to 1.5%.

Rising property prices and a summer retail splurge as well as booming car sales have also contributed to the feel-good factor, with s urging manufacturing figures for June also helping fuel the improved mood.

Goods exports excluding oil plunged however by 9.3%, and the overall trade deficit more than doubled from £1.3 billion to £3.1 billion, with real terms wages also in decline.

The economy remains 3% below its pre-crisis level.

Addressing an audience of academics, think tanks and businesses, Mr Osborne will say that " the last few months have decisively ended" the idea that the scale and pace of his measures were to blame for much slower than projected growth over recent years.

He has been forced to extend austerity measures well beyond the 2015 general election as a result of the sluggish economy.

But he will insist that borrowing more to boost spending would have " undermined" recovery and the impact on living standards " would have been much harsher".

"Those in favour of a Plan B have lost the argument" because they can't now explain the recovery, he was due to say.

The Chancellor will reject claims that he has encouraged "the wrong sort of growth" - led by debt-fuelled consumption - insisting all the data points to a much broader-based improvement.

"Our economic plan is the right response to Britain's macroeconomic imbalances and the evidence shows that it is working," he will say.

"The economic collapse was even worse than we thought. Repairing it will take even longer than we hoped.

"But we held our nerve when many told us to abandon our plan. And as a result, thanks to the efforts and sacrifices of the British people, Britain is turning a corner.

"Of course, many risks remain. These are still the early stages of recovery. But we mustn't go back to square one. We mustn't lose what the British people have achieved.

"This is a hard, difficult road we have been following. But it is the only way to deliver a sustained, lasting improvement in the living standards of the British people."

He will pledge to remain "vigilant" to threats from abroad - including growing instability in the Middle East pushing up the oil price and a fresh eurozone crisis - as well as at home.

And he will dismiss claims he is encouraging "the wrong sort of growth" - led by debt-fuelled consumer spending - insisting data shows it is "balanced" across all sectors.

In his TUC speech, Mr Miliband is expected to say: "Now at the moment you hear the Tories congratulating themselves on the economy.

"But that just shows how out of touch with ordinary families they have become.

"Living standards have been falling for longer than at any time since 1870.

"Only the privileged few in our society are feeling better off. The City bonuses are back, up by 82% in April of this year alone, helped along by David Cameron's millionaire's tax cut.

"This a recovery for the few. This is an unfair recovery. This is an unequal recovery. And an unequal recovery won't be a stable recovery. It won't be built to last.

"The only way we can have a durable recovery is with an economy that works for all working people."

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