U.K. Treasury chief hints at tax hikes
LONDON–Britain’s Treasury chief said Sunday that the government must make difficult choices on spending cuts as it seeks to slash the country’s growing deficit.
Chancellor of the Exchequer Alistair Darling is expected to announce tax hikes and public-sector spending cuts in a pre-budget review on Wednesday.
The government has said it wants to halve Britain’s 175 billion pound ($304 billion Canadian) deficit within four years.
Darling told the BBC that would "involve some very difficult choices.
"It will mean making public spending much tighter," Darling said, although he promised to "protect those frontline services that people depend upon," such as health care.
He also said he would not cut big projects like the Crossrail rail route through London, because "public spending actually can be a driver for growth in the future."
Darling gave few details of his plans and would not comment on reports he is considering a windfall tax on bankers’ bonuses. But he hinted at tax rises for the richest.
"I think people will understand that as we come through a difficult period like this … that we would expect the broadest shoulders to bear the greatest burden," he said.
Britain’s recovery is lagging the United States and the euro zone, which have already recorded renewed growth while the British economy shrank by 0.3 per cent in the third quarter of this year.
The government and the Bank of England predict GDP will return to growth in the fourth quarter. The central bank forecasts growth of 2.2 per cent next year – a prediction seen as optimistic by many economists.
The British Chambers of Commerce on Sunday said it had cut its prediction for economic growth in 2010 to 1 per cent from 1.1 per cent.
It said that "the need to significantly cut the budget deficit, strengthen the banking sector and reduce excessive personal debt will inevitably limit growth."
Associated Press
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