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Britain trumpets its booming economy

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FRONT PAGE - FIRST SECTION: Britain trumpets its booming economy
By Roger Blitz in London
Financial Times; Mar 18, 2004

Gordon Brown, UK finance minister, yesterday portrayed Britain as one of the most flourishing economies in the industrialised world, with low unemployment, interest rates and inflation that would help it achieve growth of 3 to 3.5 per cent next year.

Contrasting its economic growth with "the old British disease of stop-go", Mr Brown said overall growth since 2000 was almost twice continental European levels "and higher even than that of the United States".

Bolstered by new data showing UK unemployment falling to its lowest rate since records began two decades ago, Mr Brown's highly political annual Budget statement painted an economy that was "today closer to full employment than for a generation". The UK's high employment rate and low unemployment rate are unequalled among the Group of Seven leading economies.

Claimant unemployment was 2.9 per cent, despite the recent world downturn, Mr Brown said.

With little room to increase spending in the coming year, Mr Brown's main Budget measure was an announcement to axe more than 40,000 government jobs to raise 20bn ($36bn). That will be reinvested in public services - in contrast to the opposition Conservative party's proposals to return such a sum directly to voters' pockets. Growth would be sustained by further drives to improve weak public services and creaking infrastructure, Mr Brown said, although details would not be unveiled until July.

With a general election likely next year, Mr Brown's broadly neutral Budget was interpreted as seeking to undercut the Conservative opposition, which is seeking to exploit voter discontent with the government.

It came as no surprise that Mr Brown believed the economy had not converged sufficiently with that of the eurozone, although he made a commitment to renew the case for membership next year.

His inflation target is 1.75 per cent this year and 2 per cent next year. Britain's deficit, at 2.8 per cent of gross domestic product, remains lower than its competitors, while net debt of 34 per cent of national income also compares favourably with the US, France, Germany and Japan.

The Budget also included a "new entitlement" for graduates of "the world's top 50 business schools" to come to the UK in search of work. The government said it would allow "talented" individuals to work legally in the UK for a year. Mr Brown also pledged to increase defence and police department budgets.

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