Belfast Telegraph

Osborne: I will not borrow money to pay for tax cuts

By Andrew Woodcock and Joe Churcher

The next Budget will be held on March 21, 2012, Chancellor George Osborne announced.

Mr Osborne revealed the date of his third Budget statement as he appeared before the House of Commons Treasury Select Committee to answer questions about last week's Autumn Statement.

The Budget, on the final Wednesday before Parliament's Easter break, is likely to take place against the backdrop of the toughest economic situation since the coalition Government came to power.

The Organisation for Economic Cooperation and Development (OECD) has forecast two successive quarters of negative growth for the UK between October this year and the end of March 2012.

If this prediction is borne out, it will mean Mr Osborne delivers his Budget with the UK reaching the end of a "double-dip" recession.

However, the OECD's forecast was not supported by the Office for Budget Responsibility, which last week suggested that growth over the period will be flat, but will not be negative in two successive quarters.

Mr Osborne also insisted he will not borrow money to pay for tax cuts.

He said that in the current economic circumstances it was "not worth running the risk" of higher interest rates by making tax cuts in the hope of stimulating economic activity.

His comments to the Treasury Committee will be seen as a dig at his Labour shadow Ed Balls, who has called for a temporary cut in VAT to put money in shoppers' pockets.

He is also coming under pressure from Conservative backbenchers and London Mayor Boris Johnson to reverse the 50p top rate of income tax on earnings over £150,000 introduced by his Labour predecessor Alistair Darling.

Mr Osborne indicated that he might be ready to make cuts to specific taxes, so long as they are balanced by spending reductions.

But he insisted MPs would have to wait until his Budget on March 21 to hear precise details of his plans.

Mr Osborne insisted the economy had not been permanently damaged by downturn, but added: "There is plenty of evidence that the financial crisis has had a bigger impact than had previously been thought by anyone and that it is causing a more prolonged recovery than anyone would have hoped."