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British chancellor's 2012 budget broadly neutral on growth: experts

03-23-2012 10:32 BJT

LONDON, March 22 (Xinhua) -- The 2012 budget of British finance minister, Chancellor of the Exchequer George Osborne, was broadly neutral on stimulating growth, an economist said on Thursday during an interview with Xinhua.

"The measures in the Budget are relatively small in aggregate. There was a tax cut paid for by a tax rise, and a relatively small spending cut so it is going to have a pretty limited effect," said Carl Emmerson, the deputy director of the Institute for Fiscal Studies, an economics think-thank in London.

According to the economist, in a globalized economy, the powers of the British Chancellor of the Exchequer to keep Britain from falling back into recession, after having experienced negative growth in the final quarter of 2011, is limited.

Despite probable growth of the first quarter, Emerson argued that "there is much more uncertainty going forwards."

"Much of that is actually outside of the control of the Chancellor and depends on the world economy; on what's happening elsewhere, in Asia, what's happening elsewhere in the eurozone. So there is clearly a chance that the growth in the UK disappoints on the back of disappointing world growth, and there is a chance that recession could reoccur," he said.

Measures in the Budget sent a clear message that the road for recovery chosen by the government would be via growth, and business would drive that growth.

In Emerson's view, the measure "is potentially a good way of spending money if you've got it, and it should certainly help boost investment in the UK."

Meanwhile, British media was broadly critical of the Budget, with some media picking up on Chancellor Osborne's decision to lift tax relief for some parts of pensioners' incomes.

This will see pensioners as a group worse off by 3 billion pounds (4.7 billion U.S. dollars). The Daily Telegraph newspaper said it was a "Granny Tax hitting 5 million pensioners," while The Guardian newspaper said pensioners would fund tax cuts.

But some economists noted that pensioners had got off lightly up to now, as the British coalition government tries to rebuild after the global financial crisis and recession.

Paul Johnson, the director of the independent economic think-tank the Institute of Fiscal Studies said that pensioners had been protected up to now.

He said that many poor pensioners would not be affected as they had too little money to pay tax in the first place, and would benefit from the chancellor's decision to raise the tax-paying threshold by 1100 pounds.

The reduction in corporation tax by two percentage points to 24 percent was welcomed by some, with The Financial Times newspaper labeled it a "Business Budget."

Editor:Wang Lingfei |Source: Xinhua

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