LONDON — Britain's finance minister George Osborne will on Wednesday spell out his government's spending plans for the coming year, with another dose of austerity likely to be offset by some tax perks.
Although Britain's economic recovery and inflation figures have exceeded expectation, worries about stagnating investment and productivity mean that the Chancellor of the Exchequer is likely to stick to tough public-spending targets ahead of next year's general election as he grapples with a £109.5 billion (US$181.7 billion) deficit.
"The message I'll be giving in the budget is that the economic plan is working but that the job is far from done," Osborne has said.
The minister also vowed not to "waver" from reducing the deficit, but has suggested there may be some good news as he tries to convince the public he is sensitive to rising living costs.
It has been widely reported that he will reveal plans for income to be taxed only after earnings exceed £10,500, up from £9,440 at present.
Speculation is also mounting that he may raise the threshold at which the top 40 per cent rate of income tax kicks in, pleasing his party's right wing and laying down a marker to coalition partners the Liberal Democrats and the opposition Labour Party ahead of the 2015 vote.
He has already unveiled plans for a subsidy for childcare costs and allowances for married couples.
Osborne has also announced that the budget will include plans to extend until 2020 a scheme that helps people to join and move up the property ladder by offering government-backed loans for house purchases.
The move has been criticised by some experts amid fears that the Help to Buy scheme risks creating a fresh property bubble in London, where house prices are rising strongly.
He is also expected to announce plans to help boost exports and for the creation of a new garden city in south east England.
Wednesday's budget is also the last before Scotland votes in a referendum on whether to become independent from the rest of Britain – a poll that has massive financial implications.
The chancellor is expected to upgrade the government's projections for Britain's economic growth after it enjoyed 1.8-per cent expansion last year – the fastest annual pace since before the 2008 financial crisis.
The unemployment rate has meanwhile held close to the lowest level for almost five years.
Osborne is due to confirm plans to introduce a new 12-sided £1 coin, which is claimed to be "the most secure coin in circulation", in an effort to curb counterfeiting.
The new bi-metallic, two-coloured coin will have the same shape as the old "Threepenny bit," replacing the 30-year-old current model, which the Treasury says "is no longer suitable for a coin of its value, leaving it vulnerable to ever more sophisticated counterfeiters". — AFP