Earlier harsh cuts leave Osborne with little room for manoeuvre
BRITAIN'S coalition government will seek to bolster a faltering economy without compromising its austerity programme in an annual budget tomorrow.
Overshadowed by air strikes on Libya, Finance Minister George Osborne will have limited room for manoeuvre when he addresses parliament, having introduced a raft of tax rises and spending cuts since the coalition took power last May.
The Conservative-led government has front-loaded cuts as it seeks to virtually eliminate a record budget deficit by 2015.
Mr Osborne plans to erase £81bn (€100bn) of spending over the coming four years -- an average of 19pc for each government department.
The independent Office for Budget Responsibility (OBR) forecasts the deficit will fall from 10pc of national output in 2010/11 to 7.6pc in the next financial year as the cuts really start to bite.
Prime Minister David Cameron has promised the "most pro-growth budget in a generation".
However, the economy shrank by 0.6pc in the last three months of 2010.
Labour, in power for 13 years until last May, warns that the government is cutting harder and faster than a fragile economy can bear, while unions plan a mass demonstration in London next week.
Mr Osborne said there would be no diluting of austerity measures. However, he did say he would not be seeking further tax increases or spending cuts.
Sharp cuts for the defence budget have been thrown into sharp relief by Britain's involvement in air operations over Libya. Analysts say prolonged fighting could stretch Britain's armed forces and raise pressure on Mr Cameron to rethink deep cuts.
Mr Osborne may announce tomorrow that WPP is quitting Ireland and returning to the UK after the advertising giant's high profile decision three years ago to shift the headquarters to Dublin for tax purposes.
The potential blow to the Irish exchequer comes at a time when many of Ireland's creditors are objecting to our relatively low corporation tax rate.
Mr Osborne is expected to announce "interim improvements"in the corporate tax rules. WPP moved its tax base to Ireland in 2008 in protest at the Labour government's move to increase taxes on overseas profits.
The Treasury has contacted other UK companies which have moved their tax base to Ireland recently. (Reuters)