Chancellor Osborne sticking with austerity plan

LONDON Sun Dec 2, 2012 12:31pm GMT

1 of 2. Britain's Chancellor of the Exchequer George Osborne speaks on the BBC's Andrew Marr Show in London December 2, 2012. British finance minister George Osborne said on Sunday that he would stick with his deficit-reduction programme when he presents a half-yearly fiscal statement on Wednesday, despite weak economic growth.

Credit: Reuters/Jeff Overs/BBC/Handout

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LONDON (Reuters) - Chancellor George Osborne said on Sunday that he would stick with his deficit-reduction programme when he presents a half-yearly fiscal statement on Wednesday.

The Chancellor of the Exchequer declined to comment more specifically on whether he would be able to meet debt targets, but stressed he did not believe Britain should borrow more or increase spending.

At his "Autumn statement" on Wednesday, Osborne is expected to defend his stringent economic policies as the only credible way of solving the government's biggest political problem - its failure to deliver a strong recovery.

"It's clearly taking longer to deal with Britain's debts, it's clearly taking longer to recover from the financial crisis than anyone would have hoped, but ... to turn back now ... would be a complete disaster for our country," he said in a BBC television interview.

Economists speculate Osborne will have to find substantial new savings to meet one of his debt-reduction goals, removing Britain's underlying budget deficit.

British media reported on Sunday that Osborne planned to reduce the amount very high earners can put tax-free into private pensions each year alongside reining in the welfare budget.

Reducing the amount of money people can pay into their pensions with tax relief could raise up to 1.8 billion pounds ($2.88 billion), according to the Sunday Times.

Osborne declined to comment on the reports, but did not reject the proposals directly when questioned in the interview.

Shadow Chancellor Ed Balls advocates a slower rate of deficit reduction, citing high unemployment as one of the negative consequences of Osborne's austerity drive.

"The economic plan has failed, if you're in a hole you should stop digging," he told the BBC on Sunday.

The failure of Prime Minister David Cameron's government to nurse the economy back to strong growth after the financial crisis has fuelled attacks from Labour, which polls show would regain power if an election were held now.

Osborne declined to comment on Sunday on whether the country's independent fiscal watchdog would show him still on track to eliminate Britain's underlying budget deficit within the next five years, or to have debt as a share of national income on a downward path by the 2015/16 tax year.

However, he did say he would announce extra investment to crack down on tax avoidance by global companies with British operations on Monday.

In October, Reuters found that U.S. coffee giant Starbucks, while not breaking any law, had avoided paying the appropriate level of tax in Britain.

(Reporting by David Milliken and Alessandra Prentice; Editing by Louise Heavens and Helen Massy-Beresford)

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Comments (15)
mgb500 wrote:
I presume he includes all the MPs with offshore funds….eh Cameron? All the BBC employees who use service companies, all the multinationals who pay 50pence tax on billions of pounds profit, all those party bribers ,oops donors, who get tax breaks, all those illegal immigrants who get houses ‘on the benefit’…..until Georgey Boy Shelf-stacker, you address those areas you’re on a hiding to nothing!!!!

Dec 02, 2012 7:18am GMT  --  Report as abuse
ritchard wrote:
Oh yes, one such measure will be to reduce the 50p tax rate to 45p for higher earners and millionaires will come swarming to our shores.

Dec 02, 2012 8:07am GMT  --  Report as abuse
DR9WX wrote:
This is so funny it isn’t true.

So the financial havoc caused by farming the cash cows too hard will be solved by the cash cows allowing themselves to be farmed harder?

Too few understand the global debt/money system.

Just to let you know, this won’t work. (See Greece.)

Enjoy the slow decline. It doesn’t have to be this way, in theory. But in practice, it will.

Dec 02, 2012 9:04am GMT  --  Report as abuse
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