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Britain's Osborne Announces Growth Upgrade, Sticks To Austerity Plan

posted 19 Mar 2014, 08:02 by Sam Mbale   [ updated 19 Mar 2014, 08:02 ]

Britain's economic recovery continues into the first months of this year, with Finance Minister George Osborne saying forecasts are "the biggest upward revision to growth between budgets for at least 30 years".

LONDON, ENGLAND, UNITED KINGDOM (MARCH 19, 2014) (UK PARLIAMENT) British finance minister George Osborne announced upgrades to the country's economic growth in 2014 and 2015 on Wednesday (March 19) with new projections that could give the government a boost ahead of elections next year.

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Making his annual budget statement, Osborne also warned that Britain's public finances remained far from healthy and he would stick to his austerity plan.

"The economy is continuing to recover and recovering faster than forecast. We set out our plan and together with the British people, we held our nerve," Osborne said to cheers from members of his Conservative Party.

"I have never shied away from telling the British people about the difficult decisions we face. And just because things are getting better, I don't intend to do so today. Yes, the deficit is down by a third, now in the coming year it will be down by a half. But it is still one of the highest in Europe, so today we take further action to bring it down," Osborne told a packed House of Commons.

The Office for Budget Responsibility - Britain's budget watchdog - predicted the economy would grow 2.7 percent this year, Osborne said.

That compared with a growth forecast of 2.4 percent for 2014 made as recently as December in a budget update.

"Today the OBR (Office for Budget Responsibility) forecast growth in 2014 of 2.7 %. That's the biggest upward revision to growth between budgets for at least 30 years," Osborne said.

Growth in 2015, Osborne added, was expected to be 2.3 percent, up slightly from December's forecast for 2.2 percent.

The OBR's forecasts for Britain's economy, while higher than in December, are less optimistic than many others. The Bank of England expects growth of 3.4 percent this year, which would make Britain one of the developed world's top performers.

"Six years ago Britain suffered a great recession. We had the biggest bank bailout in the world. We had the biggest deficit since the war. We suffered the deepest recession in modern times. Or, as the Shadow Chancellor [Ed Balls] put it, "some mistakes were made". But later this year the OBR expects Britain to reach the point where our economy is larger than before it collapsed six years ago. And that is because we are now growing faster than Germany, faster than Japan, faster than the United States. In fact, there is no major advanced economy in the world growing faster than Britain today," he said in his budget speech.

Despite the improved outlook, Osborne said he was sticking closely to his decade-long plan to fix the public finances.

Osborne also said he was aiming to help manufacturers and savers with his budget plan.

"Manufacturing halved under the last government, with all bets on the City of London. So today, we support manufacturing and back all regions of our country," he said.

Osborne also said the OBR predicted the budget deficit for the 2013/14 fiscal year would be 6.6 percent of gross domestic product, compared with 6.8 percent of GDP forecast in December.

That is now expected to fall to 5.5 percent in the 2014/15 fiscal year, compared with December's projection of 5.6 percent.