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Osborne promises tax help in UK Budget

Wednesday, March 19 14:44:09

British finance minister George Osborne today promised tax relief for households, a cap on welfare, help for savers and manufacturers, and lower costs for bingo and beer as the government prepares for next year's elections.

In an annual budget statement, Osborne announced upgrades to official forecasts for country's economic growth but said he would stick to his belt-tightening plans.

His help to savers, who have been hurt by near-zero interest rates, included freeing up pension rules.

But he sent shares in gambling firms tumbling with a new tax.

"With the help of the British people we're turning our country around," Osborne said. "We're building a resilient economy."

Britain goes to the polls in May 2015 and the annual budget plan is one of the government's last opportunities to make a difference to how people feel about their finances before then.

Osborne hopes the improving economy and his focus on austerity will be a trump card in the fight against the opposition Labour party, which remains a few percentage points in polls ahead of the Conservatives.

But, in a surprise, Osborne increased the threshold at which British earners pay a tax rate of 40 percent for the first time since the 2010 elections, something lawmakers in his Conservative party had been demanding.

He also announced the latest in a series of increases in the amount of money people can earn before paying income tax.

The new forecasts, meanwhile, painted a picture of solid economic recovery. The economy is now set to grow 2.7 percent this year, according to the government's budget watchdog.

That was higher than a forecast of 2.4 percent made as recently as December and much higher than an estimate of 1.8 percent a year ago, when Britain was still struggling to shrug off the after-effects of the global financial crisis.

"That's the biggest upward revision to growth between budgets for at least 30 years," Osborne said to cheers from members of his Conservative Party.

Growth in 2015, Osborne said, was expected to be 2.3 percent, up slightly from December's forecast for 2.2 percent.

The Office for Budget Responsibility's forecasts for Britain's economy, while higher than in December, are less optimistic than many others. The Bank of England expects growth of 3.4 percent this year, which would make Britain one of the developed world's top performers.

Despite the improved outlook, which shaved the official forecasts for Britain's budget deficits in the next few years and meant debt was likely to peak a bit lower than previously thought, Osborne said he was sticking closely to his decade-long plan to fix the public finances.

"I have never shied away from telling the British people about the difficult decisions we face. And just because things are getting better, I don't intend to do so today," he said in his budget speech.

To help keep Britain on track with its plan to get rid of the budget deficit by the 2018/19 fiscal year, Osborne said the government will cap the amount of money it spends each year on welfare at 119 billion pounds ($197 billion) in the 2015/16 fiscal year.

Labour leader Ed Miliband slammed Osborne's budget as not doing enough for ordinary people. (Reuters)