Tough but fair budget makes UK economy more competitive

15:03, June 25, 2010      

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On June 23, British Chancellor of the Exchequer George Osborne outlined a five-year budget plan to reform the corporate tax system, promising simple rules and an objective of greater certainty for taxpayers.

The package sets out the actions that the U.K government will take in three areas: deficit reduction, enterprises and fairness and providing the conditions for sustainable growth.

Duncan Sparkes, counselor for economic and trade policy at the British Embassy in China

During an interview with People's Daily Online, Duncan Sparkes, counselor for economic and trade policy at the British Embassy in China, defended the Chancellor's new budget and highlighted a couple of ways to strengthen the United Kingdom's economy and boost the country's competitiveness.

A tough but necessary adjustment package

"It is our worst budget deficit since WWII, and it is a very tough adjustment package," Sparkes noted, "It means a painful decision for all the people in Britain in terms of reduction in public sector pay, freezes in pay, pensions for public sector workers and tax increases for both the rich and the poor. Now the U.K. government is doing what is unavoidable and necessary and in the long term it will strengthen the British economy."

Sparkes said the package not only focused on reducing the budget deficit but also making the British economy more competitive. There are some further government measures to help the United Kingdom recover from the recession.

"It is going to reduce the rate of taxation on business profits from 28 percent to 24 percent over four to five years. That will be the lowest level of business taxation of any major industrialized economy and one of the lowest levels in all G20 economies, "Sparkes said.

This plan will help the United Kingdom attract more international businesses and increase the competitiveness of British economy, he said.

The new coalition government is reforming taxation, particularly the welfare benefits to make it attractive for people to work and not be on welfare. This will also improve the competitiveness of the British economy, he said. There are a number of other measures targeting small businesses and investment in low-carbon technologies, which will help boost competitiveness.

"Britain is fundamentally a very competitive and important economy," Sparkes said. "The measures that are being taken in the budget are to make sure our budgetary position is safeguarded and made more secure and strengthen our basic competitiveness."
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