Osborne Unions are 'forces of stagnation

The Chancellor has said he is as determined to fight "the forces of stagnation", including the unions, as he is to tackle the budget deficit.

George Osborne told BBC News he vowed to reshape the British economy and to be "bold" promoting economic growth.

But he accused the unions and Labour of standing in the way of efforts to get the economy moving again.

The unions have refused to rule out co-ordinated strike action over cuts to public sector pensions.

Following talks between the leaders of biggest unions at the TUC earlier, TUC General Secretary Brendan Barber said: "No-one is talking about a general strike, but of course these attacks on our members could well give rise to industrial action around specific disputes."

Squeezed families

The government has also stressed that it wants to continue talking to the unions - but has not ruled out new laws banning co-ordinated strike action as a "last resort".

Mr Osborne, speaking to BBC Economics Editor Stephanie Flanders at the World Economic Forum in Davos, rejected union calls to change course following this week's "disappointing" growth figures.

"If we did that we would be plunged back into where we were a few months ago with people raising very serious questions about Britain's ability to pay its way in the world, and that will provide no platform for growth going forward," he said.

He said he was "acutely aware" that British families were feeling the squeeze over rising prices - and again refused to rule out curbs on fuel duty increases in his March budget.

But he said the UK economy had to be rebuilt with less emphasis on financial services and more on business investment and exports - and he claimed there were signs this was starting to happen.

"We have got to be as bold in promoting growth and removing barriers to business expansion, and fighting the forces of stagnation, as we have been in dealing with the deficit," he said.

'Stagnation'

But he said governments were being held back by people who oppose efforts to "create more competitive markets".

In the UK, the trade unions and opposition had opposed "controversial" changes to employment tribunals, he said, and were opposed to other "difficult" decisions aimed at promoting growth.

"I regard these people as the forces of stagnation, when we are trying to get the British economy competitive again, moving forward again."

Prime Minister David Cameron earlier vowed to "see through" the government's plan for deep spending cuts despite fears of their impact on economic growth.

He said cutting the deficit would be "tough" but the economy would "bounce back" if the UK stuck to its course.

Labour have accused ministers of "arrogance" for proceeding with what they say are £20bn of cuts this year.

After figures released earlier week showed the UK economy contracted by 0.5% in the last three months of 2010, Labour leader Ed Miliband said the government's cuts were "hurting but not working".

The coalition has been accused of lacking a "pro-growth" strategy, with outgoing CBI boss Sir Richard Lambert saying key decisions affecting business had been taken for political reasons and there was a "lack of vision" about the long-term shape of the economy.