STOCK MARKET WATCH -- Tuesday, 20 March 2012

[Ghost Dog]

7. Britain braced for more austerity in budget

LONDON: Britain unveils an annual budget on Wednesday that is likely to build on the coalition government's deficit-slashing austerity strategy, while also seeking to grow a recession-threatened economy... Although Britain is at risk of further recession amid anaemic economic growth at home, and debt troubles in key trading partner the eurozone, Chancellor of the Exchequer Osborne is expected to maintain a policy of huge cuts to state spending...

...Fitch last week lowered Britain's long-term outlook to "negative" from "stable," blaming the "very limited fiscal space to absorb further adverse economic shock," but confirmed its AAA credit rating due to the government's austerity policies. The Treasury welcomed Fitch's assessment, despite the negative outlook. "This is a reminder of why it is essential Britain sticks to its plans to deal with its debts," a spokesman said. "This is a just another warning to anyone who believes there can be deficit-financed giveaways in (the) budget."

Britain's Conservative-Liberal Democrat government, which won power in 2010, has since implemented huge public spending cuts and tax hikes to slash a record deficit inherited from the previous Labour administration.

The coalition is eager to preserve Britain's valuable AAA credit rating, that keeps state borrowing costs low, and avoid a Greek-style sovereign debt crisis.

Ahead of Wednesday's budget, British media reported that Osborne would use fresh austerity measures to offset a plan to cut income tax for the highest earners - from 50 percent to 40 percent... Treasury sources have meanwhile confirmed that Osborne would launch plans in the budget to issue state bonds, or gilts, lasting 100 years or longer, as the government seeks to lock in historically low interest rates.

/... http://www.channelnewsasia.com/stories/afp_world_business/view/1190001/1/.html