The British Chancellor of the Exchequer, Mr Gordon Brown, proclaimed "the longest period of peacetime growth since records began" yesterday even as he confirmed Britain's public finances will plunge #37 billion (€26 billion) into the red this year.
In his pre-budget statement to MPs a bullish Mr Brown said UK borrowing this year would be #10 billion more than he had forecast last April, and that borrowing would be up again next year at #31 billion, up from #27 billion forecast.
However, the chancellor assured MPs the economy was on course to meet his target of 2.1 per cent growth this year, while he anticipated accelerated growth of between 3 per cent and 3.5 per cent in the following two years.
Britain had achieved growth with record low inflation and high employment during a world turndown, said Mr Brown, and the UK economy was now in a strong position to benefit from an upturn in the global economy.
Government policies had ensured that the UK's debt burden remained lower than the average for the world's major industrialised nations, he added, pledging to move forward on "a prudent and sustainable basis".
However, shadow chancellor Mr Oliver Letwin described Mr Brown as the "biggest obstacle" to the reform of Britain's public services, accusing him of "taxing and spending and failing" and warning that taxpayers would inevitably have to pay for his increased borrowing.
While families were being warned not to borrow too much on their credit cards, Mr Letwin told him: "You are doing the same on the nation's credit card."
Responding to Mr Brown's proposed tax break for employers offering workers #50 for childcare, the Liberal Democrats, too, accused Mr Brown of introducing further complexity into an already complex tax system.
Mr Brown announced a doubling of childcare places and the creation of 1,000 children's centres for pre-school children and their parents over the next five years. With a populist touch immediately linked to England's Rugby World Cup triumph, Mr Brown announced additional rate relief for amateur sports clubs as well as a doubling of the threshold at which they would have to pay corporation tax.
The chancellor also announced he would freeze the duty on spirits for the remainder of this parliament, which he coupled with a new "stamping" scheme to prevent duty evasion and clamp down on smugglers.
An additional #800 million to fund ongoing military activities in Afghanistan and Iraq brought total spending on the "war on terrorism" to #6.3 billion.
Mr Brown also announced the government was switching to the euro-zone measure of inflation - the Harmonised Consumer Price Index - so replacing the Retail Price Index, thus providing the Bank of England with a new inflation target of 2 per cent, down from 2.5 per cent under the RPI.
Among other measures announced was #190 million to be spent as part of the New Deal on skills training; mandatory skills courses for the long-term unemployed; incentives for using "green" fuels; the relocation of 20,000 civil service jobs out of London; an extension of tax credits for research and development; and new incentives to encourage house building.
