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June 20, 2010    

Osborne aims to provide “prosperity for all”

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by Kay Murchie

As the emergency budget approaches, Chancellor George Osborne has told the BBC that the massive spending cuts will save Britain from the problems which debt-stricken Greece faces.

Speaking to the BBC’s Andrew Marr Show, Mr Osborne said: “Unless we take determined and concerted action, we will find our country on the road to ruin”.

Cutting the country’s huge deficit has been the main priority for the new coalition Government, despite warning from business groups, and former Chancellor Alistair Darling, that cutting the deficit too quickly could pose a threat to the fragile recovery.

Many experts have said deep spending cuts put Britain at risk of a “double dip” recession, just as it begins to recover from its worst recession since World War Two.

However, according to Mr Osborne, tough austerity measures are “unavoidable” but he said he aimed to provide “prosperity for all”.

While the Chancellor would not provide full details of the upcoming budget and where the cuts would come from, Prime Minister David Cameron has already said public sector pay and pensions will have to be restrained.

Furthermore, tax hikes are expected and Mr Osborne refused to rule out a rise in VAT. There has been speculation that this will rise from the current 17.5% to 20%.

Deep pay and benefit cuts are also expected while the prospect of a bank levy has been raised - aimed at clawing back billions paid by the state to bailout the financial sector after the financial crisis.

Meanwhile, business group, the British Chambers of Commerce (BCC) recently warned that “punishing” tax rises could hit economic growth.

David Frost, director general of the BCC, believes tax hikes could be harmful to SMEs and measures to reduce the UK’s deficit should come from public spending cuts.

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