Tax rises, spending cuts may be next

Tax rises and spending cuts will be needed to deal with the “shock” to the United Kingdom (UK) economy caused by leaving the European Union (EU), Chancellor George Osborne has said. He said such decisions would be taken by the next prime minister, adding that his pre-referendum warnings “have started to be borne out by events”.

Speaking on BBC Radio 4’s Today programme, Osborne said he stood by his campaign warnings about the economic impact of a vote to leave the EU, saying life would not be “as economically rosy” outside.

“It’s very clear that the country is going to be poorer as a result of what’s happening to the economy,” he said.

“We are absolutely going to have to provide fiscal security to people, in other words, we are going to have to show the country and the world that the country can live within its means.”

Asked if that meant tax rises and spending cuts, he said: “Yes, absolutely. But that decision will come under a new prime minister – it’s obviously not possible while the Conservative Party is having a leadership contest.”

He said the UK economy was well prepared for dealing with the “economic shock” but said it was the responsibility of those that campaigned to leave the EU to set out the plan to follow.

Osborne, once touted as a likely leadership contender, said he stood by the Conservative manifesto pledge to offer a referendum on the UK’s EU membership.

He said there had been a “big and lively debate” within the party but that he supported the decision “we collectively took”, refusing to say whether he had said it was not a good idea. (BBC)