Britain’s finance minister George Osborne has unveiled his last major budget update before next year’s general election, admitting a key deficit-cutting target had been missed, but revising up economic growth forecasts.
Osborne said on Wednesday the economy was now forecast to grow by three per cent this year, compared with a previous prediction of 2.7 per cent, and also revised up the estimate for 2015 to 2.4 per cent from 2.3 per cent.
But he admitted that the deficit, though falling, “remains too high” at a forecast STG91.3 billion ($A166.65 billion) in the year to March 2015, higher than a previous estimate of STG86.4 billion earlier this year.
That represents five per cent of gross domestic product, compared with 10.2 per cent when the coalition government came to power in 2010.
“Today, against a difficult global backdrop, I can report higher growth, falling unemployment, falling inflation and a deficit which is half what we inherited,” Osborne told parliament.
“We inherited an economy in crisis… I present a forecast that shows the UK is the fastest growing of any major advanced economy,” he added.
With employment rising, but many new jobs lower paid, the government has seen tax receipts shrink, hindering its bid to reduce the country’s budget deficit further.
Osborne’s Conservatives, led by Prime Minister David Cameron, had promised to bring the public deficit to an end by the time of the election in 2015.
He said the deficit was forecast to fall to four per cent next year, before moving into a surplus of 0.2 per cent in 2018/19.
With Britons headed for the polls in May, Osborne was careful to tone down the austerity measures that have dominated previous budgets, although he cautioned that his was not “a net give away”.
Instead he unveiled extra spending on infrastructure – mainly road-building and flood defences – as well as a package to support British exports to emerging markets in Asia, Africa and South America and an overhaul of property taxes.
While warning of “very substantial savings” needed in public spending, he promised STG2 billion in extra money for the National Health Service – a key battleground in the 2015 polls.
The government has come under pressure ahead of the elections from the opposition Labour party and trade unions, which have warned that economic growth has not translated into higher living standards for many people.