Government Says to Enshrine Balanced Budget Commitment in Law

Government Says to Enshrine Balanced Budget Commitment in Law

LONDON (Reuters) – Britain’s two-party coalition government will legally commit on Monday to run a budget surplus within “the next couple of years,” Chancellor George Osborne said, a largely political move meant to embarrass the Labour party.

Cutting Britain’s deficit has been the main economic goal of the country’s Conservative-Liberal Democrat coalition since it came to power in 2010, and Chancellor George Osborne wants to keep it at the top of the agenda in the run-up to a national election in May 2015.

Monday’s commitment is designed to force Labour into either signing up to the target, thus providing tacit approval for Osborne’s fiscal approach, or opposing it and facing criticism as lacking financial discipline.

In a written statement to parliament on Monday, Osborne said he would reduce the official time limit for the government to run a budget surplus to three years from five years, in an attempt to cement budget plans announced earlier this month.

“I have always been clear that more tough choices will need to be made in the next parliament to eliminate the deficit and get debt falling. This Charter entrenches the commitment to finish the job and maintain economic stability,” Osborne said.

The original deficit reduction plan envisaged Britain would run a budget surplus within five years on a cyclically adjusted basis and excluding investment spending.

The new framework will also commit the government to have total debt falling as a share of gross domestic product by 2016-17, replacing an earlier target of 2015-16 which the government has long accepted that it will miss.

Read more at Reuters