Brown ally hints at pre-election tax breaks

One of Gordon Brown's closest allies has signaled the pre-election Budget on March 16 should deliver the UK electorate a package of spending rises and marked tax breaks.

Ed Balls, the former chief economic adviser to the Treasury, says his colleague the Chancellor will be in a position to meet his fiscal rules "with a margin to spare."

According to the Financial Times, the alert is the first indication that the Government is preparing to head off the £4bn tax cuts pledged by the Tories, under Shadow Chancellor Oliver Letwin.

Mr Balls says he believes not only will the prized golden rule on spending be met, but a "balanced package" will emerge from the Government based on strong corporation tax receipts.

Speaking to political journalists, he added that a hike in the base rate before the election would not damage Labour's prospects of a third term, but rather show the "strength and prosperity of the economy."

He insisted that the Treasury would not risk Britain's economic stability, but at the same time, suggested the Monetary Policy Committee should not be reluctant to raise rates because a General Election is looming.

"It is not my job to predict or forecast what the MPC is going to do because they are independent of politics, but nor is it their job to factor the political timetable into decision-making," he said.

As a prospective Labour MP, Mr Balls added that he would like to see more "done to support families, pensioners and our [other] priority areas."

The news comes as a Mori Poll indicates that despite Conservatives and economists identifying an £11bn black hole in the public finances, public confidence in Mr Brown's economic management is growing.

 

3rd March 2005

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