Britain’s George Osborne backed away from a controversial plan to cut tax credits on Wednesday when he unveiled the first purely Conservative Party budget in twenty years.
The House of Lords last month voted down his proposal to cut tax credits, which would have saved the government some £4 billion in annual spending but also left low-income families up to £1,000 per year worse off.
Extra borrowing will make up the shortfall.
Osborne still seeks to balance the books before Britons go to the polls again in 2020. But higher than expected revenue will allow him to soften the blow of austerity in the meantime.
2.4 percent growth is expected this year, the strongest performance of any economy in the industrialized world.
During their first five years in power, when they ruled with the centrist Liberal Democrats, Osborne’s Conservatives cut in half a deficit they had inherited from Labour.
They also reduced corporate taxes and raised the personal tax-free allowance.
Defense, health care and the police are virtually exempt from fresh cuts. The deepest reductions will be in culture, energy, environmental policy and transportation.