George Osborne paved the way for fresh public spending cuts totalling £4bn in Wednesday’s Budget, insisting they were not “a huge amount in the scheme of things”.
The Chancellor said he would be aiming to trim another 0.5 per cent off budgets – equivalent to 50p for every £100 of government expenditure – by 2019-20.
He warned he would have to tighten the purse-strings further because “the world is a more uncertain place than at any time since the financial crisis”. He told BBC1’s Andrew Marr Show: “We need to act now so we don’t pay later.”
The planned new round of cuts, which could fall partly on welfare, follows a succession of Budgets since 2010 in which public spending has been squeezed.
Mr Osborne, who has struck a gloomy note about the world finances since the New Year, did not dispute that Britain faces an £18bn black hole in its finances.
He said: “£18 billion is the sum of money that has been revised off our nominal GDP. In other words, that's a number out there last year because inflation was lower.
“It's a real number in the sense that all around the world every Western country, and indeed in big emerging countries like China, Brazil, Russia, people are looking at economic prospects and thinking they are not as rosy as they were just a few months ago.”
He said: “My message in this Budget is that the world is a more uncertain place than at any time since the financial crisis and we need to act now so we don't pay later.
“That’s why I need to find additional savings equivalent to 50p in every £100 the Government spends by the end of the decade because we have got to live within our means to stay secure and that's the way we make Britain fit for the future.”
Mr Osborne refused to be drawn over speculation that he would take advantage of the falling price of petrol to raise fuel taxes – a move that would put him at odds with Tory MPs campaign for the levy to be frozen.