LONDON: Britain’s Finance Minister George Osborne unveiled his last major budget update before next year’s general election, admitting a key deficit-cutting target had been missed but revising up economic growth forecasts.
Osborne said the economy was now forecast to grow by 3 percent this year compared with a previous prediction of 2.7 percent, and also revised up the estimate for 2015 to 2.4 percent from 2.3 percent. But he admitted that the deficit, though falling, “remains too high” at a forecast £91.3bn in the year to March 2015, higher than a previous estimate of £86.4bn earlier this year.
That represents 5 percent of gross domestic product, compared with 10.2 percent when the coalition government came to power in 2010. “Today against a difficult global backdrop I can report higher growth, falling unemployment, falling inflation and a deficit which is half what we inherited,” Osborne told parliament. “We inherited an economy in crisis... I present a forecast that shows the UK is the fastest growing of any major advanced economy,” he added.
With employment rising but many new jobs lower paid, the government has seen tax receipts shrink, hindering its bid to reduce the country’s budget deficit further. Osborne’s Conservatives had promised to bring the public deficit to an end by the time of the election in 2015. He said the deficit was forecast to fall to 4 percent next year, before moving into a surplus of 0.2 percent in 2018-19. He added that the government’s achievements were significant particularly considering that “the warning lights are flashing over the global economy” including a stagnating eurozone.
With Britons headed for the polls in May, Osborne was careful to tone down the austerity measures that have dominated previous budgets although he cautioned that his was not “a net give away”.
Instead he unveiled extra spending on infrastructure —mainly road-building and flood defences — as well as a package to support British exports to emerging markets in Asia, Africa and South America and an overhaul of property taxes.
While warning of “very substantial savings” needed in public spending, he promised £2bn in extra money for the National Health Service — a key battleground in the 2015 polls.
He also said the government would legislate to allow Northern Ireland to set its own corporation tax, a key demand in the province which said it has been penalised because of the far lower rate of 12.5 percent in the neighbouring Republic of Ireland. AFP
