British Finance Minister George Osborne is presenting the tightest budget in a generation. Measures include a 20% hike in VAT and a bank levy to come into force in 2011.
Britain's Treasury chief George Osborne has announced the toughest cuts to public spending in decades and new tax rises in an emergency budget aimed at sharply reducing the country's record debts.
The government is hitting consumers with a rise in the broad-based tax on sales and services from 17.5 percent to 20 percent next year.
Osborne said he would impose a levy on banks to raise 2 billion pounds ($3 billion) a year and cut most government departments' budgets by 25 percent. The Chancellor of the Exchequer also announced he had secured an agreement from Queen Elizabeth II to accept a freeze on her support from taxpayers.
Unusually, Osborne announced no increase in taxes on alcohol, tobacco and fuel, and he repealed a high tax on cider.
Main points of the budget:
- Structural deficit set to be eliminated within five years
- Seventy-seven percent of this change will come through spending cuts and 23 percent through tax increases
- Welfare cuts worth 11 billion pounds (13 billion euros) by 2014-15, including child benefits frozen for three years, maximum limits for housing benefits and a tougher assessment for disability allowance
- Public sector workers facing a two-year pay freeze
- Government accelerating moves to raise the state pension age to 66
- Most government departments facing cuts of around 25 percent over four years, an overall figure of 17 billion pounds (20.4 billion euros) by 2014-15
- Payments to Queen Elizabeth II for carrying out royal duties to be frozen this year and subsequently facing a shake-up
- Value-added tax (VAT), a form of sales tax, to rise from 17.5 percent to 20 percent from January 2011
- Growth forecast lowered from 2.6 percent to 2.3 percent next year and set to rise back to 2.7 percent in 2014 and 2015
- In a joint move with France and Germany, government introducing a bank levy covering British banks and the British operations of foreign banks, which is expected to raise two billion pounds annually
- Unemployment expected to peak this year at 8.1 percent and then fall each year to reach 6.1 percent in 2015
- Link between basic state pension and earnings to be restored from April next year.
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