Osborne says to stick to deficit reduction plan

DAVOS, Switzerland Fri Jan 25, 2013 7:48am GMT

DAVOS, Switzerland (Reuters) - Chancellor George Osborne knocked back suggestions on Thursday from the International Monetary Fund's chief economist that he should consider slowing his deficit reduction plan.

"I have been prepared to let the automatic stabilisers operate in the UK but I don't think it is right to abandon a credible deficit plan," Osborne said at an event in Davos, Switzerland hosted by broadcaster CNBC.

"That credibility is very hard won and easily lost and I think it would be a huge mistake to put that at risk."

Osborne also said he would make the case in a future referendum for Britain to remain in the European Union if it reformed.

"I'm arguing for reform in Europe and Britain being part of a reformed Europe. You can't ignore the growing gap between the governed and those who claim to govern," he said.

(Reporting by Emma Thomasson, writing by David Milliken and Patrick Graham)