Britain to wield axe in annual budget

16th March 2016, Comments 0 comments

British finance minister George Osborne will Wednesday unveil his annual budget with more austerity pain as the global economic outlook darkens, but will pledge more cash for education and infrastructure.

Most economists believe that Chancellor of the Exchequer Osborne will likely avoid any major shocks, with three months to go until Britons vote on EU membership in a crucial referendum.

The Conservative government's finance chief will deliver his 2016 tax and spending plans before parliament at 1230 GMT, with another £4.0 billion ($5.7 billion, 5.1 billion euros) of cuts widely expected.

The chancellor is expected to say that Britain's economy is "strong" -- but warn that the "storm clouds are gathering again" for the world economy.

Prime Minister David Cameron's governing Conservative party is aiming to clear the deficit by the end of the current parliament in 2020.

The finance minister received a boost ahead of the budget, as official data showed Wednesday that Britain's unemployment rate remains at 5.1 percent -- the lowest level in a decade.

Osborne has already indicated that more heavy spending cuts are on the cards in this week's budget, amid ongoing global economic turmoil rooted in China and the eurozone, Britain's main trading partner.

"The world is a more uncertain place than at any time since the financial crisis and we need to act now so we don't pay later," he told the BBC over the weekend.

"That's why I need to find additional savings equivalent to 50 pence in every £100 the government spends by the end of the decade because we have got to live within our means to stay secure and that's the way we make Britain fit for the future."

The chancellor will reveal also the latest official forecasts for British economic growth, amid jitters over the nation's looming June 23 referendum on EU membership.

Osborne "will have to navigate a tricky path in looking to keep his current spending plans on track, while not antagonising too many voters ahead of the June referendum vote", said CMC Markets analyst Michael Hewson.

- Last budget before Brexit vote -

Cameron is leading the battle to keep Britain in the European Union, but several key members of his Conservative party -- notably Mayor of London Boris Johnson -- have joined the Leave campaign.

"Any (budget) measures that could play into the hands of those arguing for Brexit will be resisted by the prime minister," said analyst Emily Nichol at Daiwa Capital Markets.

"Osborne has already been forced to withdraw his plans to change the pension tax relief system after a backlash from backbench Tory MPs, while after years of cuts, further savings in departmental spending will not be easy to implement.

"So the chancellor will ... have to walk a tightrope between producing half-credible fiscal measures and not antagonising a restless party," she added.

Osborne was set Wednesday to green-light major railway developments in northern England and in London, in a £300-million infrastructure investment package.

The chancellor will unveil also a £1.5-billion package of extra funding for education in Wednesday's budget.

As part of the plan, he will announce that by 2020 every state school in England will become a self-governing academy, in turn handing them more control over budgets.

The funds will be used also to lengthen school opening hours.

© 2016 AFP

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