LONDON: Finance minister George Osborne yesterday warned Britons that they faced an extra year of austerity measures and insisted that reversing his belt-tightening measures now would be a “disaster”.
Chancellor of the Exchequer Osborne said Britain would face spending cuts and tax hikes until 2018 -- after the coalition government led by Prime Minister David Cameron had already previously extended the programme by two years to 2017.
The bleak announcement in a budget update, coming alongside news that the government is slashing its outlook for economic growth, is likely to heap further pressure on the administration mid-way through a five-year term in power.
Addressing parliament on Wednesday, Osborne also admitted that the government would fail to meet its official target for reducing public debt as a proportion of British economic output by 2015-16. “It is taking time but the British economy is healing after the biggest financial crash in our lifetime,” Osborne insisted in his Autumn Statement.
Confirming that he was prolonging the government’s austerity programme to 2017-18 -- beyond Britain’s next general election due in 2015 -- Osborne said: “We are making progress. It’s a hard road, but we are getting there. Britain is on the right track and turning back now would be a disaster.” Explaining why he was extending cuts in public spending and hiking taxes again, Osborne said the British economy faced “deep-seated problems at home and abroad.”
Britain’s Conservative-Liberal Democrat coalition government, which came to power in 2010, has imposed a series of painful austerity measures to slash a record deficit that was inherited from the previous Labour administration.
Cameron and Osborne have overseen the loss of tens of thousands of public-sector jobs, slashing workforces in the military, health service and various state departments. The government has also faced huge demonstrations from disgruntled workers ans students in response to the cuts.
The main opposition Labour party said Osborne’s economic plans were “in tatters”. The party’s finance spokesman Ed Balls said: “Today, after two and a half years, we can see, people can feel in the country, the true scale of this government’s economic failure. Our economy this year is contracting, (and) the chancellor has confirmed government borrowing is revised up this year, next year and every year.”
Britain meanwhile slashed its economic outlook, forecasting the economy would shrink by 0.1 percent this year and then return to growth in 2013, according to figures published alongside the budget update.
The new forecast, issued by the Office for Budget Responsibility (OBR) fiscal watchdog, showed a sharp drop on the previous 2012 growth estimate of 0.8 percent that was given in Osborne’s annual budget in March.
The OBR added that British gross domestic product was forecast to grow by 1.2 percent in 2013. That compared with previous guidance for greater expansion of 2.0 percent.
Osborne also revealed that debt as a proportion of gross domestic product (GDP) was now expected to fall in 2016-17 -- a year later than the government’s previous forecast.