2 December 2012 Last updated at 06:13 ET
Chancellor George Osborne says the rich will pay more, but welfare spending must also come down.
Chancellor George Osborne has admitted that curbing the UK’s financial deficit is “taking longer” than planned.
But he told the BBC the government was “making progress” and that to “turn back now would be a complete disaster”.
Mr Osborne, who delivers his Autumn Statement on Wednesday, said well-off people would “pay their fair share”.
Shadow chancellor Ed Balls said Mr Osborne’s judgement had been “woefully lacking” and more investment was needed to promote economic growth.
The coalition has set a target of reducing debt as a share of national income by the next general election, due in 2015.
UK public sector net borrowing, excluding financial interventions, hit £8.6bn in October, according to the Office for National Statistics (ONS), marking a rise from the £5.9bn borrowed in October 2011.
But last week the ONS confirmed that the UK’s economy had grown by 1% during the third quarter of this year, following a recession lasting nine months.
‘Pay our way’
Mr Osborne refused to divulge any details of the economic forecasts from the independent Office for Budget Responsibility, which will be unveiled during Wednesday’s statement.
But he told BBC One’s Andrew Marr Show: “We had two targets. One was to get debt share falling as a share of national income by 2015/16 and also to balance the current budget.
Ed Balls: “Unless you have a long-term jobs and growth plan you don’t get the welfare bill down.”
“It is clearly taking longer to deal with Britain’s debts. It is clearly taking longer to recover from the financial crisis than one would have hoped, but we have made real progress.
“The deficit is down by a quarter. There are a million more jobs in the private sector and to turn back now, to go back to the borrowing and the debt and the spending that Ed Balls represents would be a complete disaster for our country.”
He added that some people were calling for more borrowing and others for more spending cuts, but the government had “got the right plan and we should stick to that plan”.
The deficit had been cut by a quarter, he added.
Mr Osborne said of an economic recovery that “underpinning it will be the confidence of this country to pay its way in the world”.
However, Labour’s Mr Balls told the Andrew Marr Show that the chancellor’s “judgement has been proved to be woefully lacking”.
He added: “The growth plan is a shambles. There’s nothing there… We are in a hole with no growth and borrowing rising.”
‘Fair share’
According to the Sunday Times, the chancellor is poised to cut the £50,000 annual tax relief cap on pension contributions to as little as £30,000 in his Autumn Statement.
The change, affecting the wealthiest pension pots, would reportedly bring in up to £1.8bn a year.
Mr Balls said such a course would be “deeply unfair” and attacked the government for previously cutting the top rate of income tax from 50% to 45%.
BBC political correspondent Iain Watson said the Autumn Statement was a Budget by any other name and some tax rises for the wealthy and cuts in welfare were widely expected.
Mr Osborne said: “The richest have paid more in all of my Budgets.”
He added: “The richest will have to bear their fair share… more than they pay at the moment.”
But Mr Balls said: “There’s a millionaires’ tax cut worth £3bn… Why should pensioners pay more?”
Former Liberal Democrat Treasury spokesman Lord Oakeshott told BBC One’s Sunday Politics: “What matters in the Autumn Statement is to get the economy going.”
He said his party “must fight much harder to ensure we get policies [in government] to get it going”.
BBC News – Business
Deficit cut ‘could take longer’
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Deficit cut ‘could take longer’
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Deficit cut ‘could take longer’
