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Britain takes axe to spending in new austerity drive

Update: July, 09/2015 - 15:29

LONDONBritish finance minister George Osborne has unveiled fresh austerity measures to slash debt, evoking the plight of crisis-hit Greece in the first purely Conservative budget for almost two decades.

Chancellor of the Exchequer Osborne drastically cut welfare spending to honour campaign promises to forge ahead with austerity, which saw his centre-right Conservative party sweep to an unexpected majority in a May general election and return David Cameron as prime minister.

Speaking to lawmakers in his post-election budget statement to parliament, Osborne said on Wednesday welfare spending would be slashed by an accumulated total of £12 billion (US$18.4 billion) by the end of parliament in five years' time.

At the same time, the government will introduce a "national living wage" that could reach £9.0 an hour by 2020 that will apply to workers only aged 25 and over. That compares with the current national minimum wage of £6.50 an hour for those aged 21 and over, which will continue to exist alongside the "living wage".

"This is a Conservative budget that can only be delivered because the British people trusts us to finish the job," said Osborne, who now has a free hand over public finances after a tense five-year coalition with the centrist Liberal Democrats.

"The greatest mistake this country could make is to think all our problems are solved," he warned.

"You only have to look at the crisis in Greece to realise if a country is not in control of the borrowing, the borrowing takes control of the country."

Harriet Harman, interim leader of the opposition Labour party, slammed Osborne's budget for "making people worse off" by also axing grants for the poorest university students and capping family benefits.

"Oxi to Osborne"

Disabled people in wheelchairs blocked the road outside the prime minister's office and about 300 protesters rallied by the Westminster parliament, where they released a huge bundle of black balloons into the sky.

Some banners referred to Greek voters' rejection of austerity proposals in a referendum last Sunday, reading "Oxi to Osborne" and "Greece said no, so do we."

"I think all across Europe we should say no to any more bailouts and teach rich people to pay their taxes, pay decent wages and stop whining," said one middle-aged protester, Ivy Bell.

"Just about everyone I know has been affected in one way or the other," said protester Helen, 53.

Scotland Yard said that four people were arrested.

In all, the government plans to save £37 billion over the next five years: £12 billion from welfare cuts, £5 billion from tax changes and reducing evasion, and the rest largely from cuts to government departments, Osborne said.

Annual welfare payments are to be capped at £23,000 per household in London, against the current level of £26,000. The amount will be set at £20,000 outside the capital.

"Without sound public finances there is no economic certainty for working people," Osborne said.

Growth forecasts reduced

Osborne confirmed there would be no change to income tax thresholds or value added taxation (VAT) for at least five years.

Corporation tax, levied on business profits, will be reduced from 20 per cent to 19 per cent in 2017 and 18 per cent by 2020.

The forecast for economic growth was reduced to a 2.4-per cent rise in gross domestic product this year, down from a prior estimate of 2.5 per cent, after a stronger-than-expected 3.0-per cent expansion in 2014.

Borrowing was revised down to £69.5 billion in the current financial year, while the public deficit is to be cut at the same pace as in the previous 2010-2015 parliament.

The public purse is expected to shift to a surplus by 2019/2020, which is a year later than predicted at the time of the last budget given in March. — AFP

 

 

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