Business

Osborne warns eurozone slowdown will impact UK economy

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Media captionGeorge Osborne: "This is a critical moment for the British economy"

Chancellor George Osborne has warned that the UK economy will be affected by the slowdown in the eurozone economy.

Talking to the BBC, he said this was a "critical moment for the British economy", which was not "immune" from what was happening on the continent.

The eurozone economy was stagnant between April and June, with the German economy - Europe's biggest - shrinking by 0.2%.

Mr Osborne said there were steps the UK could take to protect itself.

"The eurozone risks slipping back into crisis, and Britain cannot be immune from that - it's already having an impact on our manufacturing and exports," he said.

Official figures published earlier this week showed that growth in the UK manufacturing sector slowed to 0.1% in August.

"We are not immune from what's going on in the rest of the world, but we can take steps to protect ourselves," the chancellor said.

"We must stick with our long-term economic plan, so delivering economic stability. We are cutting business taxes, making the UK a place to invest, and that will protect jobs right here."

The UK economy has been growing strongly this year, with GDP rising by 0.9% between April and June, following a 0.7% rise in the previous quarter.

"The Office for Budget Responsibility is forecasting around 0.6% GDP growth a quarter, so that is our official forecast, but clearly the UK is going to be affected by what's going on in our biggest export market," Mr Osborne said.

He added that the UK had to export more to the rest of the world to help compensate.

Earlier on Thursday, the Bank of England held interest rates at a record low of 0.5% for another month and chose not to extend its economic stimulus programme known as quantitative easing.