Recession-hit Britain set for crucial budget
(MySinchew) – Britain on Wednesday unveils tax and spending plans aimed at fighting its worst recession since World War II and boosting Prime Minister Gordon Brown's flagging fortunes before key elections.
Ahead of the budget to be presented by finance minister Alistair Darling at 1130 GMT, official economic data was set to show worsening unemployment and public debt as Britain struggles with the global financial crisis.
Chancellor of the Exchequer Darling was also expected to rip up his economic growth projections in light of the recession, which began in the second half of 2008.
Brown will be hoping his Labour government's 2009/10 tax and spending plans will give his leadership a shot in the arm before local elections in June and a general election that must be held by mid-2010.
Labour, in power since 1997, are lagging behind the centre-right Conservatives by up to 19 points, according to recent opinion polls.
A leading figure in the main opposition Conservative Party on Wednesday described the budget as "a day of reckoning" for the government.
"We are now facing the longest recession since the Second World War … and, of course, unemployment may now rise above the level which the government inherited," Theresa May, Conservative spokeswoman on employment, told GMTV.
Brown has said the budget would target unemployment after the jobless count surged past two million people in the three months to January — breaching that key level for the first time since Labour came to power.
Data due Wednesday was set to show the figures rising significantly further.
The Financial Times on Wednesday reported that Darling would announce in his budget funding worth 1.0 billion pounds (1.13 billion euros, 1.47 billion dollars) aimed at boosting employment for the under-25s.
Compounding Britain's woes are slumping tax revenues, due to rising unemployment and also because of the government's decision late last year to slash sales tax (VAT) on goods and services to boost consumer spending.
The VAT reduction is due to expire at the end of 2009.
Ahead of the budget, experts warned that tax cuts or public spending increases would be hard to justify.
The public purse has been stretched by a series of costly bailouts in which the government has rescued some of the country's biggest banks from the international credit crunch.
The International Monetary Fund on Tuesday said the financial crisis would cost Britain's banks the equivalent of 9.2 percent of gross domestic product — or around 132 billion pounds — by the end of the year.
Wednesday's budget, meanwhile, would also include plans for a trade-in scheme to boost the crisis-hit carmaking sector with incentives for motorists to swap old vehicles for newer, more environmentally friendly models, reports said.
However, Darling would demand that manufacturers share the cost of the initiative with the taxpayer, according to the Financial Times.
The budget was also expected to launch measures aimed at boosting Britain's struggling property market.
In his pre-budget report last November, Darling launched a 20 billion-pound economic stimulus package of tax cuts, including reducing the VAT rate.
He has also deferred plans to increase business rates by 5.0 percent this month, saying he would instead stagger the increase over the next two years.
Brown, meanwhile, will be hoping the budget can turn the page on a string of recent political scandals, including this month's resignation of a top adviser over a planned smear campaign against the opposition Conservative Party.
