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British finance chief George Osborne is to announce swingeing spending cuts and tax rises. It will be the tightest budget in a generation and the first big test for the country's new coalition government.
The measures are expected to include cuts in pay for civil servants and savings in the welfare budget. Nearly one million of the lowest-paid people are expected to be taken out of paying income tax at a cost of 3.7 billion pounds. Osborne is also expected to announce a new annual tax on banks which he says can raise around one billion pounds. Value-Added Tax on goods and services is set to go up to 20 percent from 17.5 per cent. As the sovereign debt crisis ripples through Europe, rating agencies have warned Britain's triple-A status could be at risk if Osborne's plans to cut the UK's record deficit are found wanting.