Cameron promises budget for growth

Prime minister in Davos call for global trade stimulus
Osborne says 50% income tax rate is temporary

David Cameron has promised a budget for growth in the spring, while George Osborne told a lunchtime audience of British business leaders that he saw the 50% tax rate on the better-off as temporary.

The prime minister said Europe urgently needed "an aggressive, pan-continental drive to unleash enterprise" and insisted the British people knew "there are no short cuts to a better future".

Treasury sources said the budget would contain an array of measures designed to counter the CBI's criticism this week that the government lacked a growth strategy to accompany its deficit reduction strategy.

"The ambition of my budget on the 23rd of March will be to turn the tide on the forces of stagnation," the chancellor said.

Cameron urged fellow world leaders to conclude the long-running global trade talks as he used a 24-hour trip to the World Economic Forum in Davos to urge steps that would allow cash-strapped governments to grow their way out of trouble.

"Trade is the biggest wealth creator we've ever known. And it's the biggest stimulus we can give our economies right now. A completed trade round could add $170bn (107bn) to the world economy."

The prime minister joined the German chancellor, Angela Merkel, to demand action to make trade freer after he and George Osborne had used the high-profile international venue to insist that the prospects for the UK were bright.

"We've got one last chance to get this right," the prime minister said of the Doha round of trade talks begun almost a decade ago in November 2001. "2011 is the make or break year.

"So let's agree that this is the year we will make the breakthrough. No one should hold anything back for later. There is no later."

Following the shock provided by news of a 0.5% drop in UK output in the final quarter of 2010, the prime minister and chancellor were keen to deliver the message tha! t there was room for optimism despite the pain caused by austerity.

The chancellor also said there was a good chance of a deal with the banks over the coming week that would provide commitments to lend more to business as well as restraint on pay.

Osborne said he would be able to get on with promoting London as a "great place" for the financial services sector once a comprehensive settlement had been agreed.

"We do need to move on," Osborne said in response to a call for anti-City rhetoric to be toned down. "But I am not prepared to do a deal unless I get something in return."

Osborne said there were three strands to government economic policy a "stable macroeconomy, competitive taxes and removing the barriers that are holding Britain back".

Backtracking on the government's austerity programme would be disastrous for the economy, he said. "We have to keep focused on the big picture. If we don't deal credibly with our debts, then we cannot build a more balanced economy that works for everyone."

He added that the coalition would be just as bold in promoting enterprise as it had been in dealing with the deficit.

Cameron joined Osborne in his defence of the tax increases and spending cuts announced since the election.

"It's going to be tough but we must see it through," the prime minister said. "The scale of the task is immense, so we need to be bold in order to build this economy of the future. The British people know these things. They understand there are no short cuts to a better future.

"In less than eight weeks we will announce our budget for growth at home and I will also set out a specific plan for growth in Europe," the prime minister said.

Cameron said the government had shown what could be done even when money was tight by cutting corporation tax, funding a new enterprise allowance, boosting spending on apprenticeships and recycling savings from the welfare budget for infrastructure investment.

He also announced that th! e UK wou ld be providing an additional 20m in each of the next two years in an attempt to eradicate polio.

Admitting that these were "difficult times" for the public finances, the prime minister said: "It is never the wrong time to do the right thing."


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