Britain Drops Plans for Big Tax Cuts, Outlines Tight Budget for Fiscal 1986
LONDON -- Britain's Conservative Party Government, backing off from earlier plans to stimulate the economy with tax cuts equivalent to as much as $3.4 billion, outlined a fiscal 1986 budget with little new spending and only $850 million in tax reductions.</br></br>"Government can't create jobs, only businesses can," Chancellor of the Exchequer Nigel Lawson said.</br></br>Still, the budget for the year starting April 1 should allow Britain's economy to grow 3% this calendar year, up from last year's growth of 2 1/2%, Mr. Lawson said. The budget aims to help the economy by offering more belt-tightening to shrink the deficit, shore up the pound and fight inflation.</br></br>The British budget is part of a broader European pattern of financial austerity. France, West Germany and Italy also are committed to narrowing their budget deficits, and all four governments acknowledge they are trying to reverse years of rising state spending.</br></br>Mr. Lawson rebuked the U.S. for "importing a large part of the rest of the world's savings, and exporting some of its own inflation. This isn't a sustainable situation," the chancellor said.