video transcript

ROUGH CUT (No reporter narration). George Osborne stuck to his guns on austerity in Wednesday's budget but turned to the Bank of England to do more to help spur growth in the stagnant economy which he said would grow less than previously forecast. He said the country's economy was now expected to grow only 0.6% this year, half the rate predicted only three months ago, but he vowed to stick the course on austerity. Osborne said the central bank's inflation target would remain at 2 percent a year - but that was not enough. Osborne said he was launching a review of the Bank of England's mandate and said it might need to use "unconventional monetary policy instruments" and give a clearer idea of what it will do in the future. Osborne will seek to save £11.5bln of savings in the next spending round, £1.5bln more than the previous target. Total spending for 2015/16 has been set at £745bln. Public sector pay increases will be limited to 1 percent. Despite a slump in opinion polls, Osborne and Conservative Prime Minister David Cameron have stuck to their push to fix Britain's budget deficit and rising public debt, hoping for a recovery before they fight for re-election in two years time. Britain's economy may be back in a recession again, while rising inflation is hurting households.