LONDON — Britain’s top treasury official unveiled a sweeping emergency budget on Tuesday combining severe spending cuts and some tax increases in Britain’s deepest fiscal retrenchment since the early years of Margaret Thatcher’s rule.Read the rest here.
“Yes, it’s tough but it’s also fair,” the official, George Osborne, told Parliament, promising that the budgetary measures would protect the least advantaged. “This is the unavoidable budget. I am not going to hide hard choices from the British people.”
He added: “The crisis in the euro zone shows that unless we deal with our debts there will be no growth,” forecasting that the British economy would grow over the next five years by a maximum annual rate of 2.9 percent in 2013, compared to 1.2 percent this year. He said the government would make spending cuts totaling £17 billion, about $25 billion, more than had been planned by the former Labour government over the next five years.
Mr. Osborne said Britain’s welfare costs had risen over the last 10 years to £192 billion from £132 billion (to $284 billion from $195.3 billion), an increase of 45 percent. He announced a three-year freeze on benefits received by parents for raising children, limits on subsidies for public housing and a new way of screening people receiving state benefits for disabilities. Promising accelerated efforts to raise the retirement age to 66, he said the measures would save £11 billion ($16.3 billion) in welfare spending by 2015.
To howls of protest from opposition legislators, Mr. Osborne also announced an increase in value-added tax on a wide range of goods and services to 20 percent from 17.5 percent beginning January, saying the measure would raise £13 billion ($19.2 billion) in revenue. The increase was seen by some British economists as the most sweeping since it increased basic costs for many people.
Mr. Osborne said his priority had been to “make sure that the measures are fair” so that the “richest pay more than the poor.” Mr. Osborne promised help for low-income families and for retirees living on state pensions whose monthly payments would henceforth rise in line with average wage increases.
A preview of coming attractions here unless we move quickly to get our house in order.