Fixing the economy is far from over, warns George Osborne

George Osborne today warned the job of repairing Britain’s economy was far from over despite revealing the Government is on course for its first budget surplus for more than a decade.

The Chancellor told the House of Commons Britain’s economy was reaping the benefit of the Coalition’s strategy with borrowing down, employment up and economic growth in 2013 expected to twice as strong as forecast earlier this year.

But delivering his Autumn Statement, he warned the job was “not yet done” as he laid out plans for a responsible recovery to secure, rather than squander, the progress achieved since the Coalition came to power.

Confirming that the Government will extend the retirement age for millions, and introduce a new cap on welfare spending next year, the Chancellor said more difficult decisions remained after the “calamity” of the deepest recession on record.

He said: “Britain’s economic plan is working, but the job is not yet done. The deficit is down but it is still far too high. Growth is up but growth in productivity is still too low.

“We will fix the roof while the sun is shining. If we give up on our plan now we will be saddled with a deficit that would be worst in Europe.

“And this side of the house is not prepared to let that happen.”

The Chancellor revealed forecasts from the Office of Budget Responsibility which showed that growth this year should be 1.4 per cent, up from an earlier prediction of 0.6 per cent, reports The Telegraph.

For 2014, the OBR believes Britain’s economy will grow by 2.4 per cent, against an initial estimate of 1.8 per cent.

Borrowing over the next five years would be £73 billion less than previously thought, and that Britain should run a “small surprlus” in 2018-2019.

At the same time revised figures revealed that output tumbled by 7.2 per cent in the 2008-2009 recession. The Chancellor said this was a painful reminder of the “economic calamity that befell Britain and the simple fact that the country remains poorer for it”.

But he insisted Britain was “moving again” as he outlined a package measures to back business and families. The annual increase in business rates will be capped at 2 per cent next year with discounts for pubs, cafes and restaurants.

Fuel duty will be frozen as expected, meaning the levy is 20p per litre below it would have been under Labour’s “hated” fuel duty escalator.

As expected the Chancellor also outlined a new £1,000 transferable tax allowance for married couples from April 2015 and the removal of employer national contributions on workers aged under 21.

The Government will also unveil the “largest ever package” to tackle tax avoidance, to raise £9 billion over five years.

A new capital gains tax will be introduced to catch foreigners selling UK homes, saying it was “not right” they currently avoided a levy when they sell a home that is not their primary residence.

Positioning himself as the man to trust on the economy, the Chancellor said the Government had “held its nerve” on austerity and the results were now being felt. He said businesses were now expected to create 3.1 million jobs over the rest of the decade, offsetting a 1 million reduction in public sector headcount.

He added: “The hard work of the British people is paying off and we will not squander their efforts.”

Shadow Chancellor Ed Balls accused Mr Osborne of being in “complete denial”. He said: “For all your smoke and mirrors you are borrowing £198 billion more than you planned in 2010.

“More borrowing to pay for three years of economic failure, more borrowing in just three years under this Chancellor than under the last government in 13 years.”

But John Longworth, the director general of the British Chambers of Commerce praised the Chancellor for delivering a “steady” Autumn Statement rather than promising “a grab bag of electoral giveaways”.

He said: “While Britain’s economy is improving, and our businesses report strong confidence, the UK is still some way from achieving the truly great we need.

“Business will be pleased that the Chancellor has finally acted on business rate bills after years of relentless increases that sucked the life out of businesses in all parts of the UK.

“Upgraded growth forecasts, lower borrowing forecasts, and increased business confidence are all indications that the UK economy is moving in the right direction.”

On Osbornes comments on tax avoidance Jamie Morrison, private client partner at chartered accountants, HW Fisher & Company, comments: “Osborne’s call here shows that he continues to muddy the waters of evasion and avoidance. Clearly, everyone must pay their way, but with these measures we are in danger of alienating the 1% of tax payers that pay a significant 30% in income tax.

“Some of the largest savings will actually be derived from the government improving efficiency, for instance, the collection and administration of tax credits will yield a billion pounds over three years.”