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LONDON: Britain will stick firmly to a barrage of austerity measures, finance minister George Osborne insisted yesterday in a budget that also slashed economic growth forecasts, while offering plans to boost the weak economy as the eurozone crisis re-ignites.
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 was 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 a record budget deficit inherited from the previous Labour administration in 2010. Osborne’s insistence on driving down state borrowing comes despite the chancellor announcing that the government was halving its economic growth forecast for 2013.
Gross domestic product (GDP) was 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) yesterday.
Economic growth guidance for 2014 was also cut to 1.8 percent from the previous estimate of 2.0 percent that was given in December.
The OBR meanwhile hiked its forecasts for government borrowing, stating that it would stand at £108bn ($164bn) in the year to April 2014 from a previous estimate of £99.3bn. Osborne said that the problems in eurozone member Cyprus, where savers are threatened with helping to fund an international bailout, “are further evidence that the crisis is not over and the situation remains very worrying”.
“Another bout of economic storms in the eurozone would hit Britain’s economic fortunes hard. Forty percent of all we export... (is) to the eurozone.”
Britain is a member of the European Union but not the single currency bloc. AFP