Brits brace themselves for harsh spending cuts in today’s budget

| June 22, 2010 | 0 Comments

Today’s budget, which represents the tightest in 3 decades, is likely to bring painful tax hikes and harsh spending cuts.

The tough measures are designed to deal with Britain’s record deficit of £155 billion and will be delivered today by Chancellor George Osborne at 1230 BST (1130 GMT).

According to Mr Osborne, the massive spending cuts will save Britain from the problems which debt-stricken Greece faces.

“Unless we take determined and concerted action, we will find our country on the road to ruin,” he told the BBC at the weekend.

Cutting the country’s huge deficit has been the main priority for the new coalition Government, despite warnings 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.

However, there is a tax sweetener as the rate at which people start paying tax will rise by £1,000 to £7,475 taking almost one million people out of the tax system.

In addition, the coalition Government also plans to ease the pain by proceeding with its proposal to freeze council tax in England.

However, there will be severe cuts to the child tax credit system - with some families set to lose more than £500 a year.

Finally, the Chancellor, who is the UK’s youngest for more than a century, is also expected to unveil a number of revenue-raising measures, including a rise in capital gains tax and increases in cigarette and alcohol duties.

Tags: , , , , , ,

Comments (0)

Trackback URL | Comments RSS Feed

There are no comments yet. Why not be the first to speak your mind.

Leave a Reply

Visited 3145 times, 2 so far today