LONDON (Reuters) - British finance minister George Osborne, fresh from his Conservative Party’s election victory on May 7, said he would spell out on July 8 how he plans to make further big cuts to public spending and boost the country’s growth prospects.
“I am going to take the unusual step of having a second budget of the year because I don’t want to wait to turn the promises we made in the election into a reality,” Osborne said in an article in Saturday’s edition of the Sun newspaper.
“And I can tell you it will be a budget for working people.”
Prime Minister David Cameron and Osborne promised voters during a closely fought election campaign that they would not raise taxes over the next five years. That means deep savings will have to be found in welfare spending and public services as they pursue their plan to fix Britain’s still-weak public finances.
Osborne also wrote in the Sun that his budget would seek to tackle Britain’s poor productivity record and help the north of the country grow faster and narrow the gap with London and the south.
After an initially slow recovery from the global financial crisis, Britain grew faster than any other large, developed economy in 2014.
Osborne’s standing has recovered along with the economy and he was last week named as the effective deputy of Prime Minister David Cameron, who is due to stand down before the next national election scheduled for in 2020.
But Britain’s budget deficit remains large at nearly 5 percent of gross domestic product and its growth prospects are overshadowed by the failure since the crisis to make its workers more productive, saddling them with little growth in their pay.
Osborne has promised to put public finances back in the black by 2019, having missed his original target of doing that by this year.
Unlike during the 2010-2015 coalition government, Osborne has a freer hand this time around after the Conservatives won an outright parliamentary majority in the May 7 election.
Their former partners, the centrist Liberal Democrats, have said they stopped the Conservatives from making some deep cuts to welfare spending while they were in government.
But Osborne also faces the delicate balancing act of meeting his austerity target without undermining the economic recovery, just as the government prepares to hold a referendum on whether Britain should remain in the European Union.
Economists with U.S. bank Citi said on Friday that Osborne would avoid front-loading the spending cuts in the early years of the new parliament in order to avoid the risk of a slowdown which could tilt public opinion against EU membership.
Many economists have questioned whether Osborne will be able to make the kind of savings he promised before the election.
Editing by Mark Heinrich