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British budget offers hope but little change

Wednesday, March 20, 2013 - 02:40

March 20 - British finance minister George Osborne delivers another austerity budget to a country impatient with near-zero growth. Joel Flynn looks at the headline announcements and asks whether they'll help reduce the UK's £1trl debt problem.

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Some will say it contains radical solutions. Others that it's just more of the same. British Finance Minister George Osborne has presented his plans for UK spending. SOUNDBITE: British Finance Minister, George Osborne, saying (English): "Today I'm going to level with people about the difficult economic circumstances we still face and the hard decisions required to deal with them. It is taking longer than anyone hoped but we must hold to the right track // and by setting free the aspirations of this nation we will get there." Key announcements included lower corporation tax, amongst the lowest in the world, a freeze in fuel duty and tax exemption for anyone earning less than £10,000 This was Osborne's fourth budget, and each time the government sticks to austerity it's popularity falls. These public sector workers are on strike over pay cuts. Osborne has boxed himself in with his commitment to fiscal austerity, so he's now looking to the Bank of England for some of the answers. The next bank chief Canadian Mark Carney will be able to favour growth over inflation. And use "unconventional policies" to encourage people to spend, which could include negative interest rates. How to spur growth is Osborne's biggest problem. Growth forecasts have just been halved and borrowing projections increased. £2.5 billion pounds has been allocated for infrastructure projects. But developments like the high speed railway network take a long time to reap rewards. Opposition politicians weren't impressed. SOUNDBITE: Labour Party leader, Ed Miliband, saying (English): "They don't think growth matters but people in this country do and all he offers is more of the same and more of the same budget from a down-graded chancellor." SOUNDBITE: British Finance Minister, George Osborne, saying (English): "This is a budget that doesn't duck our nation's problems, it confronts them head on. It's a budget for an aspiration nation. It's a budget that wants to be prosperous, solvent and free." Market reaction was muted. Nick Parsons from National Australia Bank does not see any further downgrades on the cards. SOUNDBITE: Nick Parsons, "What he has said here very clearly is he's not borrowing for growth, he's actually financing the growth by spending reductions in 2015 and 2016. Of course it remains to be seen whether those are going to materialise. But there's nothing here that's going to make the ratings agencies rush for their red pencils and down grade the UK again." But Government debt was also revised up too - it's now £1.19 trillion. And Osborne has just two years until the next election.

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British budget offers hope but little change

Wednesday, March 20, 2013 - 02:40