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| British Treasury Chief George Osborne Reports Strong Growth, but Deficit Is ‘Too High’ | |
| (35 minutes later) | |
| LONDON — Still battling to clean up Britain’s public finances, George Osborne, the chancellor of the Exchequer, on Wednesday offered limited giveaways to Britons but claimed credit for delivering them rapid economic growth, in his last big economic policy statement before the spring election. | LONDON — Still battling to clean up Britain’s public finances, George Osborne, the chancellor of the Exchequer, on Wednesday offered limited giveaways to Britons but claimed credit for delivering them rapid economic growth, in his last big economic policy statement before the spring election. |
| By several measures, Britain is Western Europe’s economic success story, with the fastest levels of growth in major developed economies and rapidly falling unemployment. On Wednesday, the growth forecast for 2014 in Britain was upgraded to 3 percent, from the 2.7 percent predicted in March. | By several measures, Britain is Western Europe’s economic success story, with the fastest levels of growth in major developed economies and rapidly falling unemployment. On Wednesday, the growth forecast for 2014 in Britain was upgraded to 3 percent, from the 2.7 percent predicted in March. |
| But many of those new jobs are paying low wages, productivity levels continue to disappoint, and tax receipts have fallen short of expectations. | But many of those new jobs are paying low wages, productivity levels continue to disappoint, and tax receipts have fallen short of expectations. |
| Just after he came to power in 2010, Prime Minister David Cameron promised to “balance the books” within five years. On Wednesday, Mr. Osborne said that while the country’s budget deficit was falling, it was “still too high,” with borrowing projected at £91.3 billion, or $146 billion, this year and £75.9 billion next year. | Just after he came to power in 2010, Prime Minister David Cameron promised to “balance the books” within five years. On Wednesday, Mr. Osborne said that while the country’s budget deficit was falling, it was “still too high,” with borrowing projected at £91.3 billion, or $146 billion, this year and £75.9 billion next year. |
| National debt is now expected to exceed 80 percent of gross domestic product this year, peaking at just over 81 percent in 2015. | National debt is now expected to exceed 80 percent of gross domestic product this year, peaking at just over 81 percent in 2015. |
| That means that, whoever wins next year’s elections, the austerity and squeeze on public spending that Britain has experienced after the financial crisis is destined to continue for several years. | That means that, whoever wins next year’s elections, the austerity and squeeze on public spending that Britain has experienced after the financial crisis is destined to continue for several years. |
| Nevertheless, after months dominated by issues such as immigration, Mr. Osborne is keen to steer the economy toward the center of the political debate as opinion polls show that his Conservative Party is trusted by more voters on economic management than is the Labour Party, the main opposition in May’s general election. | Nevertheless, after months dominated by issues such as immigration, Mr. Osborne is keen to steer the economy toward the center of the political debate as opinion polls show that his Conservative Party is trusted by more voters on economic management than is the Labour Party, the main opposition in May’s general election. |
| On Wednesday, he urged Britons not to risk “the economic security we have gained” and said that he had a “long term economic plan on course to prosperity.” | On Wednesday, he urged Britons not to risk “the economic security we have gained” and said that he had a “long term economic plan on course to prosperity.” |
| Mr. Osborne’s most eye-catching announcement was a change to stamp duty, a tax levied on the purchase of properties, to shift the burden more onto higher-value homes. That appeared to be an attempt to combat the opposition Labour Party’s plans to place an annual “mansion tax” on expensive properties. | Mr. Osborne’s most eye-catching announcement was a change to stamp duty, a tax levied on the purchase of properties, to shift the burden more onto higher-value homes. That appeared to be an attempt to combat the opposition Labour Party’s plans to place an annual “mansion tax” on expensive properties. |
| Mr. Osborne also announced plans to crack down on multinational companies that shift revenues out of the country to reduce their tax payments, and to curb the losses from the financial crisis that banks can offset against tax. | Mr. Osborne also announced plans to crack down on multinational companies that shift revenues out of the country to reduce their tax payments, and to curb the losses from the financial crisis that banks can offset against tax. |
| Concessions also included the abolition of air passenger taxes for children, and of a tax levied when pensions are inherited by spouses. Similarly, married couples will also be able to inherit tax-free savings accounts from their partners without paying any duty. | Concessions also included the abolition of air passenger taxes for children, and of a tax levied when pensions are inherited by spouses. Similarly, married couples will also be able to inherit tax-free savings accounts from their partners without paying any duty. |
| Government borrowing remains stubbornly high and with a budget deficit of around 5.8 percent of G.D.P. — higher than many countries in the eurozone — Mr. Osborne had few options to make Wednesday’s spending plan, known as the Autumn Statement, into a festive, pre-Christmas giveaway. | Government borrowing remains stubbornly high and with a budget deficit of around 5.8 percent of G.D.P. — higher than many countries in the eurozone — Mr. Osborne had few options to make Wednesday’s spending plan, known as the Autumn Statement, into a festive, pre-Christmas giveaway. |
| “He doesn’t have anything like as much room for maneuver as he would like to have,” said Philip Rush, chief British economist for Nomura in London, “there is no fiscal room to come out with a big pledge on tax cuts.” | “He doesn’t have anything like as much room for maneuver as he would like to have,” said Philip Rush, chief British economist for Nomura in London, “there is no fiscal room to come out with a big pledge on tax cuts.” |
| “The fact that productivity has been weak means you have been creating a labor-intensive recovery,” Mr. Rush added, “and these are lower paying jobs than the ones that were being created pre-crisis. The mix of jobs in the economy is relatively low skilled compared with beforehand. They are not generating the tax receipts you would have expected.” | “The fact that productivity has been weak means you have been creating a labor-intensive recovery,” Mr. Rush added, “and these are lower paying jobs than the ones that were being created pre-crisis. The mix of jobs in the economy is relatively low skilled compared with beforehand. They are not generating the tax receipts you would have expected.” |