TORY Chancellor Osborne warned yesterday that the deepening world crisis of capitalism means he must ‘act now rather than pay later’ and include billions of pounds of extra cuts in Wednesday’s Budget, with further cuts now being planned.
Only a few months ago the same Chancellor was boasting that everything in the garden was rosy. The Treasury has said that the additional cuts amount to £4bn. Osborne said that they would be ‘equivalent to 50p in every £100’ of public spending by 2020, which was ‘not a huge amount in the scheme of things’.
He told yesterday’s Andrew Marr Show that the world was ‘more uncertain’ than at any other time since the 2008 financial crisis. He said the UK needed to live within its means to withstand economic shocks.
He said he will continue to honour Tory pledges to cut business taxes. Earlier in the Sun on Sunday, the Chancellor said his Budget, on 16th March, ‘will set out the clear direction we must hold to get through the current uncertainty’, ie to avoid the ship sinking.
He warned that ‘the hopes of a stronger global recovery have evaporated’. He cited the slow-down in China, the fall in oil prices, interest rate changes elsewhere in the world and political instability in the Middle East as among the reasons for the world economy slowing.
‘It’s been the worst start to a year on stock markets for almost half a century,’ he wrote. He warned: ‘You only have to look at the unsettling events in Greece, coming to a head today, to be reminded of what can happen when a country loses control of its economy.’
Osborne said: ‘In Wednesday’s Budget, we need to take action to make sure we follow that plan and remain secure. So we’re going to need to look for more savings in the public spending, so the country lives within its means.’
He said that despite cuts already made ‘our debt levels are still growing’. He added: ‘That’s going to mean more difficult decisions. For a start, I can confirm that, working with my great colleague Iain Duncan Smith, I’ve identified the £12billion in welfare cuts we said we would make.’
He went on to say: ‘So, as we said at the Election, the £26,000-a-year benefit cap that we introduced in the last Parliament will have to come down. Many of those households who have already had their benefits scaled back have moved into work, and lowering the cap will provide an even greater incentive for people to find jobs and get out of the benefits trap.’
Meanwhile, millions of households could face an increase in insurance costs, following a warning that the chancellor may target premiums in the Budget.