LONDON (Reuters) - British finance minister George Osborne said on Sunday that he would stick with his deficit-reduction program when he presents a half-yearly fiscal statement on Wednesday.
The Chancellor of the Exchequer declined to comment more specifically on whether he would be able to meet debt targets, but stressed he did not believe Britain should borrow more or increase spending.
At his “Autumn statement” on Wednesday, Osborne is expected to defend his stringent economic policies as the only credible way of solving the government’s biggest political problem - its failure to deliver a strong recovery.
“It’s clearly taking longer to deal with Britain’s debts, it’s clearly taking longer to recover from the financial crisis than anyone would have hoped, but ... to turn back now ... would be a complete disaster for our country,” he said in a BBC television interview.
Economists speculate Osborne will have to find substantial new savings to meet one of his debt-reduction goals, removing Britain’s underlying budget deficit.
British media reported on Sunday that Osborne planned to reduce the amount very high earners can put tax-free into private pensions each year alongside reining in the welfare budget.
Reducing the amount of money people can pay into their pensions with tax relief could raise up to 1.8 billion pounds ($2.88 billion), according to the Sunday Times.
Osborne declined to comment on the reports, but did not reject the proposals directly when questioned in the interview.
Shadow finance minister Ed Balls advocates a slower rate of deficit reduction, citing high unemployment as one of the negative consequences of Osborne’s austerity drive.
“The economic plan has failed, if you’re in a hole you should stop digging,” he told the BBC on Sunday.
The failure of Prime Minister David Cameron’s government to nurse the economy back to strong growth after the financial crisis has fuelled attacks from Labour, which polls show would regain power if an election were held now.
Osborne declined to comment on Sunday on whether the country’s independent fiscal watchdog would show him still on track to eliminate Britain’s underlying budget deficit within the next five years, or to have debt as a share of national income on a downward path by the 2015/16 tax year.
However, he did say he would announce extra investment to crack down on tax avoidance by global companies with British operations on Monday.
In October, Reuters found that U.S. coffee giant Starbucks (SBUX.O), while not breaking any law, had avoided paying the appropriate level of tax in Britain.
($1 = 0.6240 British pounds)
Reporting by David Milliken and Alessandra Prentice; Editing by Louise Heavens and Helen Massy-Beresford