Timothy Geithner backs George Osborne's spending cuts

Timothy Geithner says he is "very impressed" by George Osborne's financial strategy

UK Chancellor George Osborne's austerity plan has received the backing of the US Treasury Secretary.

Timothy Geithner told the BBC that he was "very impressed, as just one man looking from a distance, at the basic strategy that he's adopted".

He said Mr Osborne had been handed "problems not created by this government".

But he said the chancellor had "locked his government and the coalition into a set or reforms that are very good".

At the Davos-based economic forum earlier this year, Mr Geithner had said that, in the case of the US, rapid, drastic spending cuts were "not the responsible way" to cut budget deficits.

That is in contrast to the direction of the coalition government led by David Cameron, which has implemented the biggest fiscal squeeze in the UK in a generation.

Mr Osborne plans £81bn of spending cuts, but Mr Geithner said the UK's deficit position was worse than that of the US, which is one of only two G20 countries which expects its deficit to rise, not fall, this year.

"You need to bring [the deficit] down in a way that is reasonably growth friendly, and still preserves the capacity for investments," said Mr Geithner, speaking to BBC Radio 4's Today programme.

"If you don't do that, if you mis-calibrate, then the risk is that you make the problem worse over time."

He said he was also worried about European banks not having the same capital as US banks.

And Mr Geithner said the "light-touch approach to financial regulation" which was "designed consciously to pull financial activity from New York, and from Frankfurt and Paris to London" was a "deeply costly strategy for financial regulation".

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