By IRNA
London : Britain Wednesday announced increased military spending due to its involvement in two wars, despite being forced to cut the country’s growth forecast to 1.75 – 2.25 per cent due to tight constrains of a slowing economy and stretched public finances.
Unveiling the government’s latest budget, Chancellor of the Exchequer Alistair Darling said he was making an additional Pnds 2 billion (Dlrs 4 bn) available to supporting frontline troops, including Pnds 900 million more to be spent on military equipment.
The increase comes after the parliamentary Defence Select Committee reported on Monday that the costs of Britain’s combined military operations in Afghanistan and Iraq this year were likely to double to Pnds 3.3 billion (Dlrs 6.6 bn).
Under pressure to revive the government’s reputation for economic management, Darling said the budget was for “stability now and in the future.” But he announced government borrowing would increase to Pnds 43 bn for 2008-09, around Pnds 7 bn higher than forecast in November.
Britain was better placed than other countries to withstand a global slowdown, he maintained, but as expected, he cut the forecast for 2008, to the upper end of independent estimates.
The forecast given in last autumn’s pre-Budget report was for growth to slow from around 3 per cent in 2007 to 2 to 2.5 per cent this year. But despite the cut, he estimated that growth would recover to between 2.25 per cent and 2.75 per cent in 2009.
The chancellor admitted that inflation would rise in the short term under pressure from rising food and commodity prices, but insisted there would be “no return to the inflation rates of the early 1990s.” With record oil prices approaching 110 dollars per barrel, he announced that he was delaying a 2p increase in fuel tax that was due to take effect in April until October. The next increase he suggested would be only 0.5p and would not be scheduled until 2010.
Without detailing specific measures, Darling has pledged to work with energy companies to help low-income households pay their fuel bills.
Some 4.5 million households currently live in fuel poverty, spending at least 10 per cent of their income on meeting energy costs.
The chancellor said he would legislate to force energy companies to lower the tariffs on prepayment metres and reduce bills for poorer customers.
He also said there would be reforms to the North Sea oil and gas fiscal regime to encourage investment with supplies in decline and the country becoming more dependent on energy imports.
In response to the budget, opposition Conservative leader David Cameron said the government has left Britain “badly prepared for an economic downturn.”