UK had "borrowed too much and saved too little" - Osborne

Wednesday 19 March 2014 18.45
George Osborne says UK economy is recovering faster than forecast
George Osborne says UK economy is recovering faster than forecast

British finance minister George Osborne has promised tax relief for households, a cap on welfare, help for savers and manufacturers, and lower costs for bingo and beer as the government prepares for elections.
              
In an annual budget statement, Osborne announced upgrades to official forecasts for the country's economic growth but said he would stick to his belt-tightening plans.

Mr Osborne said that the country had "borrowed too much and saved too little". But he said his Budget would build "a resilient economy".
              
His help to savers, who have been hurt by near-zero interest rates, included freeing up pension rules. But he sent shares in gambling firms tumbling with a new tax. 

Britain goes to the polls in May 2015 and the annual budge tplan is one of the government's last opportunities to make a difference to how people feel about their finances before then.

Osborne hopes the improving economy and his focus on austerity will be a trump card in the fight against the Labour party. 

But, in a surprise, Osborne increased the threshold at which British earners pay a tax rate of 40% for the first time since the 2010 elections, something lawmakers in hisConservative party had been demanding. He also announced the latest in a series of increases in the amount of money people can earn before paying income tax.
              
The new forecasts, meanwhile, painted a picture of solid economic recovery. The economy is now set to grow 2.7% this year, according to the government's budget watchdog. That was higher than a forecast of 2.4% made as recently as December and much higher than an estimate of 1.8% a year ago, when Britain was still struggling to shrug off the after-effects of the global financial crisis.
              
Growth in 2015, Osborne said, was expected to be 2.3%, up slightly from December's forecast for 2.2%.

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

Despite the improved outlook, which shaved the official forecasts for Britain's budget deficits in the next few years and meant debt was likely to peak a bit lower than previously thought, Osborne said he was sticking closely to his decade-long plan to fix the public finances.
              
"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," he said in his budget speech.
              
To help keep Britain on track with its plan to get rid of the budget deficit by the 2018/19 fiscal year, Osborne said the government will cap the amount of money it spends each year on welfare at £119 billion in the 2015/16 fiscal year.

The chancellor was said to be the toast of brewers, pubs and drinkers after announcing a 1 pence cut in the price of a pint for the second year running. The industry said the move will protect 7,000 jobs, mainly of younger people working in pubs and bars.

But UK bookmakers such as Ladbrokes and William Hill turned sharply negative after the UK finance minister announced a new tax on fixed-odds betting terminals.

Ladbrokes fell 11.7% while William Hill fell 6.8% in London trade after Osborne said the duty on fixed odds betting terminals would be raised to 25%, having traded roughly flat before the announcement. 

Irish bookmaker Paddy Power - which has several outlets in the UK - also finished the day down, dropping 2.74% to €59.01.