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  1. ITV Report

Theresa May mounts strong defence of free market economy

Theresa May has mounted a strong defence of free market capitalism in a speech to mark 20 years of political independence of the Bank of England.

The prime minister said under the right rules and regulations the free market is "the greatest agent of collective human progress ever created".

"It was the new combination which led societies out of darkness and stagnation and into the light of the modern age.

"It is unquestionably the best, and indeed the only sustainable, means of increasing the living standards of everyone in a country.

Mrs May went on: "And we should never forget that raising the living standards, and protecting the jobs, of ordinary working people is the central aim of all economic policy."

"Helping each generation to live longer, fuller, more secure lives than the one which went before them."

The prime minister started her professional life at the Bank of England. Credit: PA
  • Dealing with 'our debts' with help strengthen economy

Mrs May, who started her professional life at the bank in 1977, also said a balanced approach to public spending is key in ensuring that the economy operates in the interests of working people.

"That means continuing to deal with our debts, so that our economy can remain strong and we can protect people's jobs."

Mrs May also said that the Conservative's "successful management of the economy" has enabled investment in "vital public services" to be made.

"To abandon that balanced approach with unfunded borrowing and significantly higher levels of taxation would damage our economy, threaten jobs, and hurt working people," she said.

"Ultimately, that would mean less money for the public services we all rely on."

The prime minister also stressed the value of an open financial system Credit: AP

The prime minister's comments came after Jeremy Corbyn warned that capitalism was facing a "crisis of legitimacy" during his keynote speech at the Labour Party conference.

"Some argue that a free market economy is an end in itself and that drawing attention to the downsides is somehow anti-business," she said.

"Others would use the imbalances that are now apparent as a justification for the total rejection of the free market economy which has done so much to improve our lives.

"My argument has always been that if you want to preserve and improve a system which has delivered unparalleled benefits you have to take seriously its faults and do all you can to address them.

Mrs May also stressed the value of an open financial system which has the right level of regulation.

Mrs May also paid tribute to Mark Carney's achievements as the Bank's Governor Credit: PA

Meanwhile, Bank of England Governor Mark Carney warned of its limited influence on the economy, in particular in respect to the impact of Brexit.

He insisted the Bank alone "cannot solve broader societal challenges" across the UK and suggested there has been an exaggeration of its powers.

"This bears emphasising because in recent years a host of issues have been laid at the door of the Bank of England from housing affordability to poor productivity.

"Calls for the Bank to solve these challenges ignore the Bank's carefully defined objectives. And they confuse independence with omnipotence," he added.

Addressing the future impact of Britain's withdrawal from the European Union on the economy, Mr Carney said: "Ultimately, the prosperity of the UK will reflect not just the final Brexit arrangements but also the Government's fiscal and structural policies."

"The Bank will do everything it can to support adjustment consistent with its statutory obligations," he added.

Mr Carney also said it would continue to assess and mitigate the risks associated with Britain's divorce from the EU.