* Osborne says economic recovery not yet secure, unbalanced
* Osborne says must still confront problems in budget
* UK, China in talks about yuan clearing bank in
By William James and Grace Li
LONDON/HONG KONG Feb 20 British finance minister
George Osborne warned on Thursday he would deal with "hard
truths" about Britain's unbalanced economic recovery in his
annual budget next month, emphasising a need for more
He also said Britain was too reliant on consumer spending
and on the finance industry in London.
Speaking in Hong Kong en route to the G20 finance ministers'
meeting in Australia, he said Britain's economic recovery was
not secure and more exports and business investment were needed
- echoing the view of Bank of England Governor Mark Carney.
In a bid to increase trade and investment with the region,
he said the British and Chinese governments were in active
discussions about setting up a clearing bank for China's
currency in London.
Osborne also stressed a need to keep pursuing an austerity
agenda in order to reduce the country's budget deficit and bring
the national debt down. The speech is likely to be one of his
last before the budget statement on March 19.
The budget will be his final chance to meaningfully alter
fiscal policy before a May 2015 election.
"This is not a budget where we can rest on our laurels and
say 'job done'," Osborne told the British Chambers of Commerce
in Hong Kong. "It is a budget where we must confront our
problems and deal with some hard truths."
Osborne has to date been cautious not to be seen cashing in
on the political capital generated by Britain's fastest rebound
since the financial crisis for fear of stoking expectations that
the government can afford to ease up on spending cuts.
He said that chief among Britain's problems is that the
economy is unbalanced and too dependent on consumer spending.
"We cannot rely on consumers alone for our economic growth,
as we did in previous decades," he said. "And we cannot put all
our chips on the success of the City of London, as my
predecessors did. Britain is not investing enough. Britain is
not exporting enough."
The move to create a clearing bank for the Chinese currency
in London will help its aim to become the Western centre of
offshore yuan trading and should foster greater confidence among
European companies to adopt it as a trade currency.
At present, London mainly relies on Hong Kong's offshore
yuan infrastructure to obtain yuan liquidity and clearing
service. Osborne also said that more British retailers, such as
department store John Lewis, are going to start
accepting payments in yuan.