The Chancellor of the Exchequer, George Osborne, has told the House of Commons that faster economic growth alone will not cut Britain’s public sector deficit. The claim came during the debate on the 2014 budget.
Mr Osborne had good news for the country as the Office for Budget Responsibility (OBR) – the politically neutral body that monitors the British economy – has once again revised up its projection for UK economic growth to 2.7 percent.
The OBR also predicts that the deficit, which was £157bn a year when Osborne came to office, is now down to £108bn and will disappear completely in the year 2018. The projection for the fall in the deficit is:
2014/2015 – £95bn
2015/2016 – £75bn
2016/2017 – £44bn
2017/2018 – £0.5bn (surplus)
The Chancellor has pledged to continue with pay restraint in the public sector “prudent management of departmental finances” and that that ministers now regularly come in under budget.
Osborne also set a cap on welfare of £119bn a year. Only a few benefits such as State Pensions will not be subject to the cap and exceeding the cap would require parliament’s approval. The Chancellor insisted “Britain must live within it means”, and that his deficit reduction plan would save the average family £2000 a year in interest.