[ 2014-12-16 ]

Oil price collapse is good news for British people, says George Osborne
The collapse in world oil prices is “overall a
very good thing” for Britain, the US and Western
economies, George Osborne has said.

The Chancellor called the fall in oil prices this
year a “net positive” that would also put
pressure on Russian president Vladimir Putin and
his oil-dependent economy.

Brent crude has fallen 41.6pc so far this year and
was trading at $60.62 on Monday night.

“We have important oil and gas industries in the
US and the UK but nevertheless this is a big boost
for American and British consumers and
businesses,” he said at the end of an address to
the Economic Club of New York.

Mr Osborne acknowledged the challenges facing the
North Sea oil and gas industry following by the
price falls, but pointed out that the tax cuts for
oil companies he announced last month would help
ease their pain.

The Chancellor admitted Britain was no longer a
net exporter of oil, and the price drop would be
“particularly welcome” for European countries
still battling low growth rates.

He added that the fall in prices could seriously
undermine Mr Putin, as the Russian economy is
squeezed by Western sanctions following his
interventions in Ukraine.

“This puts a lot more pressure on Vladimir
Putin,” he said. “People had been asking
whether sanctions are working, [and] can Putin
ride this out with strong oil prices.

“I don’t think that looks so clear now. The
Russian budget is heavily dependent on high oil
prices. He might be exposed by this.”

Mr Osborne said the oil price repurcussions would
“only be a good thing” for nations working to
enforce the rule of law in Europe, notably that no
country should invade a sovereign neighbour.

The Chancellor made his comments in a question and
answer session at the end of a major address
laying out “the case for optimism” for British
and American economic recovery.

He defended the role of an activist monetary
policy guided by independent central banks,
committed the Coalition to further budget cuts and
called for supply-side reforms to bolster
innovation and productivity.

At the heart of the speech was the newly-announced
plan for a Charter of Budget Responsibility
committing the Government to achieving a balanced,
cyclically-adjusted budget by the fiscal year
2017-2018.

“It commits us to finishing the job and getting
our national debt falling,” he said. “If after
seven years of growth we don’t start reducing
out debt, around the world people will ask: ‘if
not now, then when?’ Manana is no longer a
credible fiscal plan.”

Source - The Telegraph

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