UK economy ‘out of intensive care’

The UK economy is ‘‘out of intensive care’’ and moving towards a recovery from the financial crisis, Chancellor George Osborne declared last night.

Mr Osborne made the claim as he prepared the ground for major changes in state-owned banks, suggesting that RBS could be broken up and shares in Lloyds Banking Group sold off.

His statement reflects growing optimism among ministers that the economy is finally over the worst of the economic crisis that began in 2008 and has squeezed millions of household budgets.

Delivering his annual Mansion House speech in the City of London, Mr Osborne highlighted recent economic figures which showed robust employment levels, a resumption of modest economic growth and that companies are more optimistic about the future.

‘‘The British economy is healing. We are moving from rescue to recovery,’’ he said.

Ministers have been reluctant to say in public that the economy has turned the corner for fear of looking complacent or out of touch. David Cameron is said to be especially wary of any comments suggesting ‘‘green shoots’’.

Mr Osborne balanced his comments with a warning that the Coalition has much more to do to build on recent progress. ‘‘While Britain has left intensive care, we still need to secure the recovery and make sure we continue to treat the ailments that brought us low in the first place.’’

That will mean significant changes to the British banking sector, especially the banks that came under State control during the financial crisis.

The Government is ‘‘actively considering’’ ways to sell off its stake in Lloyds, Mr Osborne told his City audience.

‘‘We can now take the first steps to returning Lloyds to the private sector where it belongs.’’ The first offer would be to pension funds and other institutional investors, but a subsequent round could see Lloyds shares offered to the public.

Mr Osborne dashed recent political speculation about an early sale of RBS shares, insisting that the right moment to sell is ‘‘some way off’’. RBS remains ‘‘weighed down’’ by too many bad loans from its pre-crisis expansion.

Mr Osborne is considering splitting RBS in two and creating a ‘‘bad bank’’ that would hold the bad loans. The ‘‘good bank’’ could then ‘‘focus on the good parts of its business – supporting the British economy and maximising the benefits for the taxpayer’’.

Mr Osborne said that ‘‘with hindsight’’, RBS should have been split when the Government took its stake in 2008.

However, he insisted that he was not criticising his Labour predecessor over that rescue.

The Telegraph, London

The original release of this article first appeared on the website of Hangzhou Night Net.