|Osborne told parliament the ruling coalition 'has a plan and we're sticking to it' amid calls to reduce cuts [Reuters]
Britain's government has cut its economic growth forecast for this year, saying it will be slower and inflation will be higher than previously expected.
George Osborne, the country's finance minister, said the official forecast for gross domestic product growth had been downgraded from 2.1 per cent to 1.7 per cent, because of rising commodity prices and last year's fourth quarter contraction.
The announcement came as Osborne unveiled his annual budget, which he said would help kick-start the country's weak economy despite the ongoing spending cuts designed to curb a growing public deficit.
"Let it be heard clearly around the world... that Britain is open for business,'' Osborne said as he announced a 2 per cent point cut to corporation tax.
A total of $34bn of government spending cuts are due in 2011-12, around a quarter of the savings lined up by the Conservative-Liberal Democrat coalition by 2015.
The government is attempting to eliminate most of a deficit of 10 per cent of national output before the 2015 election, while also nurturing a fragile economy back to health.
'Worse to come'
Osborne, ignoring calls to reduce the size of the cuts, which are the deepest for decades, told parliament: "Britain has a plan and we're sticking to it."
Britain was in recession longer than the other Group of Seven industrialised nations and a shock 0.6 per cent contraction in gross domestic product growth in the final quarter of last year has heightened fears for the future.
Following last year's general election, Osborne delivered an unpopular emergency budget and spending review in which he announced plans to save $132bn over five years in order to slash a record public deficit.
Tim Friend, Al Jazeera's correspondent in London, said there was still worse to come for the British economy
"What Osborne announced today wasn't really the most important thing he has had to say on the economy over the last few months. The kind of cuts that will shortly come into effect will impinge on families all over the UK," he said.
However Osborne "announced some measures today that will go some way to alleviate some of the pain. He's not going to let petrol increase as high as it might have done.
"He's going to give some help to first-time homebuyers... to get some growth back into the economy."
So far the government remains on course to undershoot his official borrowing target for the current 2010/2011 financial year that runs to the end of March, despite official data published on Tuesday showing that public sector net borrowing surprisingly hit a much larger-than-expected $19.2bn in February - the highest level on record for the month.
Also on Tuesday separate data showed that British annual inflation had jumped to 4.4 per cent in February, the highest level since October.
Source: Al Jazeera and agencies