Radio Sandwell News

George Osborne warns of further spending cuts in Budget

2016-02-26 19:48:55

George OsbourneGeorge Osborne: "The economy is smaller than we thought in Britain"

Chancellor George Osborne has warned he may have to make fresh cuts to public spending in next month's budget.

He told BBC political editor Laura Kuenssberg that global economic turmoil and slower growth meant "we may need to undertake further reductions".

Mr Osborne slowed the pace of spending cuts in his November spending review.

But recent figures showing the UK economy was smaller than expected meant savings must be found in his Budget statement on 17 March, he said.

Speaking exclusively to the BBC's political editor during a visit to China, Mr Osborne said he would rather look for extra cuts now than risk breaking his own manifesto commitment to achieve a surplus in the budget by the end of this Parliament.

The chancellor did not completely rule out raising taxes in the event of a further slowdown in growth, but said that now was not the time for "significant" tax hikes.

'Rainy day'

He would not spell out the details of any further cuts, but he said the Conservatives would stick to their manifesto pledge to protect some government departments.

It is understood he would not look to increase the level of cuts dramatically but would initially seek to make further efficiencies in government departments.

He said in the exclusive interview: "We may need to undertake further reductions in spending because this country can only afford what it can afford and we'll address that in the Budget because I'm absolutely clear we've got to root our country in the principle that we live within our means and that we have economic security."

He went on to say the "whole purpose of our economic plan was to have a budget surplus.

"It is a rainy day plan - it is all about anticipating the future and because things have got markedly worse in the global economy, because we have more facts now from the Office for National Statistics about the size of the British economy and, frankly, because we got big challenges at home to make the economy more productive even as more people get work.

"Because of all of those things, we have to respond to those events.

"So that's what our plan is rooted in and it may require further reductions in spending. I'll address that in the Budget but people should know this of me: I will do what is required to keep our country safe and secure."

Decisions about the level of potential future cuts will only be made once the chancellor receives the official assessments from the Office for Budget Responsibility, he added.

The extra cuts would be likely to be made towards the end of the Parliament, before 2020.

In his November statement, Mr Osborne watered down planned £4.4bn cuts to tax credits and eased back on planned spending cuts to the Home Office and other departments.

He was able to do this due to a combination of better tax receipts and lower interest payments on debt.

Source: bbc.co.uk

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