Britain stays in austerity path in unveiled budget

LONDON - Agence France-Presse

British Finance Minister George Osborne poses for pictures as he prepares to unveil the governments annual budget to parliament on March 20. AFP photo

Britain will stick firmly to a barrage of austerity measures, finance minister George Osborne insisted in a budget that also slashed economic growth forecasts, while offering plans to boost the weak economy as the eurozone crisis reignites.

Chancellor of the Exchequer Osborne, who is facing calls from within his own Conservative party to reduce deep cuts to state spending in a bid to fuel growth, told parliament that Britain “must hold to the right track.” “We are slowly but surely fixing our country’s economic problems,” Osborne said, as he unveiled a series of measure aimed at boosting growth, including far-reaching infrastructure projects, while insisting that Britain is set to escape a new recession.

“We have now cut the (inherited) deficit, not by a quarter but by a third,” the chancellor said as he outlined his tax and spending plans for 2013-14. “Despite the progress we have made there is much more to do and today I am going to level with people... It is taking longer than anyone hoped but we must hold to the right track.” Osborne was referring to his so-called Plan A - backed by Prime Minister David Cameron - to drive down the record budget deficit inherited from the previous Labour administration in 2010.

Osborne’s insistence on reducing state borrowing comes despite the chancellor announcing that the government was halving its economic growth forecast for 2013.

Gross domestic product (GDP) is expected to grow by just 0.6 percent this year compared with a previous forecast of 1.2 percent, according to estimates issued by the Office for Budget Responsibility (OBR) on March 20.

The economic growth guidance for 2014 was also cut to 1.8 percent from the previous estimate of 2.0 percent rate given in December.

“As expected, the key message from the UK Budget is that the government is sticking doggedly to its austerity plans, regardless of the weakness in the economy,” said Vicky Redwood, chief UK economist at the Capital Economics consultancy.