UK growth rebound gives go-ahead for further government spending cuts

Britain’s government is celebrating a sharp turnaround in the country’s economy.

The UK’s budget watchdog, the Office for Budget Responsibility, expects growth this year to be 1.4 percent, rising to 2.4 percent next year.

Finance minister George Osborne said that vindicates his austerity measures: “It’s a serious plan for a grown up country. But the job is not done. By doing the right thing, we’re heading in the right direction. Britain’s moving again; let’s keep going.”

Osborne announced a big fall in projected borrowing by the government, but stressed the cuts in government spending will continue to rebalance public finances and restore the economy to health.

As recently as April, Osborne was under heavy criticism from the opposition Labour Party as the UK economy flat-lined. The International Monetary Fund also urged him to speed up spending.

Labour is now focusing on what it calls a “cost of living crisis”, saying sluggish wage growth and surging fuel and transport bills have left many Britons worse off, something Osborne tried to deflect with a freeze on fuel duty.

Foreign property investors to be taxed

In a budget statement to the UK Parliament, Osborne revealed a number of new policies.

He said Britain will impose capital gains tax on foreign investors selling homes that are not their primary residence from 2015 as part of an attempt to curb soaring house prices in London.

“It’s not right that those who live in this country pay capital gains tax when they sell a home that is not their primary residence – while those who don’t live here do not. That is unfair. From April 2015, we will introduce capital gains tax on future gains made by non-residents who sell residential property here in the UK,” Osborne said.

Britons pay capital gains tax – typically at 28 percent – on any profit from selling property that is not considered their primary residence.

Retail revival sought

Britain will attempt to re-invigorate its town centres with relief on business rates to encourage firms to re-occupy vacant properties, Osborne said.

He plans to introduce a “re-occupation relief” that will halve business rates for new occupants of empty sites.

Business rates are taxes to help pay for local services, charged on most non-domestic properties, including shops, pubs, cafes and restaurants.

Osborne said the measure would “get the vacant shops that blight too many town centres to open again.”

Many British towns are still suffering the effects of the recession that hit the British economy in the wake of the global financial crisis.

According to the Local Data Company, Britain’s shop vacancy rate was 14.1 percent in October.