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Blair eyes economic risks but confident of growth
British PM Tony Blair warned of potential risks to UK economy from Europe, the US and high oil prices just three months before an expected election.
British Prime Minister Tony Blair warned on Tuesday of potential risks to the UK economy from Europe, the US and high oil prices just three months before an expected election, but said he was "reasonably optimistic" about growth.
"The most important thing is to keep a tight grip on the stability of the economy," Blair told a parliamentary committee.
"There are obviously external potential risks that are there from Europe or America and a downturn in the world economy, but I think we are reasonably optimistic about our forward growth."
He said he was keeping a close eye on crude oil prices but noted that high prices were so far having little effect.
"I think oil prices are a potential issue, although for anyone who lived through the 1970s, it is remarkable how this rise in oil price has taken place and hasn't had a bigger impact on growth prospects."
He also said the Government was seeking to boost housing supply which would help keep prices under control.
Blair's Labour Party will emphasise its economic track record and stewardship of public finances over the last eight years when it fights an election, expected by pollsters in May.
Amid accusations that borrowing is running out of control and warnings that taxes will have to rise if, as expected, Labour wins a third term, Blair said he was confident Britain would meet its fiscal rules.
"The forecasts are pretty robust and both on the golden rule and the sustainable investment rule, we believe they will be met," Blair said, supporting the Treasury's stance.
Last week, the National Institute of Economic and Social Research said Finance Minister Gordon Brown was in danger of breaking his own "Golden Rule" - that he only borrows to invest over the economic cycle.
The think tank's warning echoed comments from the Institute for Fiscal Studies and the opposition Conservatives have seized upon such warnings to claim taxes would rise under Labour.
They, on the other hand, are promising lower taxes if elected by finding savings from reducing government bureaucracy.
But recent data have gone Brown's way. Data for the fourth quarter showed the economy bounced back, bringing 2004 growth in line with Brown's forecast, while even the public finances showed some improvement in December.
Blair pointed to strong tax receipts data for last month and said the public finances were in a "very, very strong position" and reiterated his opposition to lifting the top rate of income tax.
Blair also said European Union regulations were hampering the competitiveness of British manufacturers.
"There is an issue to do with manufacturing competitiveness but I think that's as much to do with European regulation as it is with British regulation," he said.
