Britain's Conservative-Liberal Democrat government will present its 2011 budget to parliament on March 23rd, finance minister George Osborne said today as he proposed changes to the way government spending is dished out.
Mr Osborne foreshadowed tighter checks on a huge part of the budget used for top-up funding by government departments which face swings in unpredictable areas such as social security.
The minister said he hoped next year's fiscal policy statement would contain details of a new framework for department funding to improve budget discipline across government, as the coalition seeks to cut #81 billion from spending over four years.
"This is a very large budget - half of government spending - that is not really managed, so we are looking at a new framework and I hope to say more about that in the budget on March 23," he said.
The coalition government has announced plans to all but eliminate a budget deficit running close to 10 per cent of national output through severe spending cuts and broad tax hikes by the time of the next election, scheduled for May 2015.
Some economists have questioned whether the government will be able to achieve its ambitious spending cuts - averaging about 20 per cent across departments - especially as some of the reduction relies on the grey area of efficiency savings.
The independent Office for Budget Responsibility will on November 29th update economic growth and government borrowing forecasts that feed into fiscal policy.
Financial markets have so far reacted warmly to the government's austerity drive, which has helped push gilt yields down to record lows, but investors are on alert for signs of slippage as the coalition seeks to implement the cuts.
Britain's economic recovery, after an 18-month recession, has been surprisingly strong so far this year, but analysts say the government's austerity drive, a flagging housing market and a dearth of credit will weigh on activity next year.
Reuters