The FINANCIAL -- Chancellor of the Exchequer
George Osborne came under increasing pressure Wednesday to introduce tax
cuts in next month's budget, with a leading business lobby group and a
former government minister adding their voices to the growing chorus
urging action to stimulate the economy.
According to London Stock Exchange, our weeks ahead of the March 21 budget, the Confederation of British Industry urged the chancellor to adopt GBP500 million of cuts to business taxes, in particular a tax break to foster investment in infrastructure projects. The lobby group argued that tax cuts were affordable and wouldn't involve the government abandoning its deficit-reduction strategy.
Liam Fox, the former defence secretary who resigned in October over a conflict of interest after using a friend as an adviser, called for the chancellor to reduce taxes on employment, saying it would make it cheaper to hire workers, therefore boosting the workforce.
Writing in the Financial Times newspaper, Fox said there was a strong case for deeper spending cuts to fund the tax reduction.
Fox is a leading cheerleader for the right wing of the Conservative Party--the senior partners in the coalition government--and his first foray back into politics is seen as a rallying call to other lawmakers to put pressure on Osborne to do more to stimulate growth.
The calls for tax cuts were bolstered by the publication Tuesday of January's public-sector borrowing figures, which showed the U.K. had its biggest surplus in four years. This means Osborne is on track to be around GBP7 billion under his GBP127 billion borrowing target for this financial year.
However, a Treasury official Wednesday sounded caution, saying one month of strong figures didn't mean the government had a sudden windfall to spend. Osborne has resolutely refused to budge from his austerity plan, which will see the government instigate GBP107 billion of spending cuts and tax rises by 2015.
In recent weeks Osborne has faced calls to consider introducing a stimulus measure, such as a tax cut, from leading economic think tanks the Institute for Fiscal Studies and the National Institute of Economic and Social Research. While Nick Clegg, leader of junior coalition partners the Liberal Democrats, and David Laws, a Lib Dem lawmaker and former Treasury secretary, have called for an income tax break to ease the burden on family finances.
Last week, Osborne used the decision by Moody's Investors Service to place the U.K.'s AAA government debt rating on negative outlook as further justification for the austerity measures, saying they were the only thing preventing the country losing its prized triple-A rating.
Related Stories
