The man in charge of Britain’s finances has unveiled his recovery plan for the UK economy.
In his pre-Budget report Alistair Darling admitted the economy will contract by 4.75 percent this year.
Although he needed to reassure financial markets the deficit can be cut, Darling believes stimulus measures must continue.
He said: “Whilst I am confident that the UK economy is on the road to recovery we can’t be complacent. We must continue to support the economy until recovery is established. To cut support now could wreck the recovery and that’s a risk that I am not prepared to take.”
Responding to public anger at large bonus payments made at banks that have been bailed out with taxpayers’ money, the finance minister announced a one-off 50 percent tax on year end bonuses above 27,600 euros.
There will also be other higher taxes on the rich.
With an election looming, Darling promised increases in public spending in areas that matter to voters, like the health service as well as law and order and education.
He also pledged to cut the deficit to 5.5 percent of GDP by 2013/14.