Britain's Finance Minister Alistair Darling (L) and his wife Margaret pose for pictures with a briefcase containing the 2010 Budget Report at a photocall outside 11 Downing Street in London, yesterday. AFP
British finance minister Alistair Darling cut his borrowing and growth forecasts on Wednesday in a pre-election budget that he said would help secure the nation's recovery from a record recession.
Darling also announced a 2.5-billion-pound growth package to help strengthen recovery, as the Labour government was fighting to stay in power at a general election expected on May 6.
"This will be a budget to secure the recovery, tackle borrowing and invest in Britain's industrial future," said Chancellor of the Exchequer Darling in his budget speech before parliament.
"It will set out how the government sticks to its plan to halve the deficit in four years," added Darling in his last budget before a general election which Labour is battling to avoid defeat to the main opposition Conservatives.
The chancellor cut his economic growth forecast for 2011 to 3.0-3.5 percent but held his prediction of 1.0-1.5 percent expansion this year.
And he also trimmed his official borrowing target to 167 billion pounds for the current financial year which runs until the end of this month. That was lower than the previous estimate of 178 billion pounds.
Economists agree that Britain needs deep public spending cuts and higher taxes to fix public debt, which has surged to record levels due to huge banking bailouts and recession-hit taxation revenues.
"Borrowing is lower than forecast last year but the recovery is still in its infancy and there are still tough choices ahead," Darling added, hinting at possible future spending cuts, after Britain escaped recession late last year.
To aid the battered economy, Darling unveiled a growth package, worth the equivalent of 2.79 billion euros or 3.73 billion dollars, to "help small business, promote innovation, invest in national infrastructure."
And to boost the battered housing market, he lifted the lower tax threshold for property purchases to 250,000 pounds, from 125,000 pounds previously.
Financial markets will likely focus on the government's attempts to slash a record public deficit.
Darling said he wanted to cut the deficit to 4.0 percent of GDP by the 2014-2015 financial year.
The chancellor added that the government had so far raised 2.0 billion pounds in a bonus "supertax" that was slapped on bankers' bonuses last December.
He added that the Treasury has also received more than 8.0 billion pounds in fees and charges from taxpayer support given to the banking sector.
After a series of multi-billion-pound rescue packages, the government now owns 84 percent of the Royal Bank of Scotland and 41 percent of Lloyds Banking Group, while it nationalised lender Northern Rock outright.
"We will sell out shares in RBS and LLoyds, as well as Northern Rock in a way that maximises returns to the taxpayer," added Darling on Wednesday.
He also expressed solid support for an international-coordinated levy on the banking sector, which sparkled the global financial crisis and subsequent recession.
Britain's budget comes amid heightened concern about soaring public deficits in eurozone member nations Greece and Portugal, whose finances were also battered by a severe downturn.
European stock markets were sent into a spin on Wednesday after Portugal was slapped with a ratings downgrade. Britain was recently warned that the perilous state of public finances put its top AAA credit assessments at risk.
Political pundits did not expect Darling to spell out exactly where the axe will fall on government spending -- and which taxes might rise in the future to plug the massive hole in the public finances.
The government has faced mounting calls to fix its finances, with the European Commission attacking the government over the "absence of detailed departmental spending limits" in plans to curb the record deficit.
Darling was boosted last week by better-than-expected borrowing and rising taxation revenues in February, in a sign of the tentative recovery.