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Carney praises ECB but accuses Eurozone of failing to act

Bank of England Governor Mark Carney praised the European Central Bank for the "boldness" of its plan announced last week to buy hundreds of billions of euros of government bonds to fight the "potentially dangerous" combination of weak growth and falling prices.

Mark Carney speaking at Davos last week. Credit: Reuters

But he criticised the eurozone for failing to act on other reforms, including making the single currency area more like the United States, where states cushion one another against economic shocks via federal government transfers.

"It is difficult to avoid the conclusion that, if the eurozone were a country, fiscal policy would be substantially more supportive," he said in a speech in Dublin.

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Mark Carney attacks eurozone over austerity

The Governor of the Bank of England launched a broadside against eurozone austerity policies, warning that it was caught in 'a debt trap'.

Mark Carney's comments come as Greece's new Prime Minister confirmed he will be fighting the tight austerity policies placed on the country by the EU.

The Governor of the Bank of England Mark Carney speaking last year. Credit: Anthony Devlin/PA Wire

Since the financial crisis all major advanced economies have been in a debt trap where low growth deepens the burden of debt, prompting the private sector to cut spending further. Persistent economic weakness damages the extent to which economies can recover. Skills and capital atrophy. Workers become discouraged and leave the labour force. Prospects decline and the noose tightens.

As difficult as it has been, some countries, including the US and the UK, are now escaping this trap. Others in the euro area are sinking deeper.

– Mark Carney

Osborne remains tight-lipped on policies to tackle inequality

Chancellor George Osborne refused to say whether he would implement policies to tackle inequality, such as raising taxes on the wealthy, in the next Budget.

In an interview with Business Editor Joel Hills, he admitted that growth had not been entirely balanced, but insisted the gap between rich and poor was getting narrower:

Mr Osborne also said Britain needed a "clear economic plan" due to uncertainties on the international stage.

He mentioned the ongoing issues in the Eurozone and Greece, downgrading of Russian bonds and the dropping price of oil as examples.

Labour: Chancellor has broken promise to balance the books

Ed Balls Credit: PA Wire

Labour Shadow Chancellor Ed Balls said George Osborne has broken his promise to "balance the books".

He said Tory claims that the economy is fixed will "ring hollow with working people who are still not feeling the recovery".

"Wages are down by £1600 a year since 2010 and now these figures show a concerning slowdown in economic growth too, Mr Balls said.

“Construction is down again, business investment under this government is lagging behind our competitors and exports are way off target.

"And the stagnating wages we have seen over the last five years are the reason why the Chancellor has broken his promise to balance the books."

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Osborne: British economy grew by 2.6% last year

Chancellor George Osborne said the latest GDP figures confirmed the British economy grew by 2.6% last year.

But he said with the international climate worsening, the UK Government needed to go on working through their economic plan to ensure Britain did not slide back into economic chaos.

His comments come after the latest GDP figures from the Office for National Statistics showed the British economy grew by 0.5% in the final quarter of last year.

Osborne: GDP figures show recovery is 'on track'

Chancellor George Osborne welcomed the GDP figures and said they showed the economic recovery was "on track".

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