LONDON (Reuters) – The budget next week will exempt more workers from income tax and use bank levy money to help young people train for jobs, ministers said on Saturday.

The budget, billed as pro-growth and pro-reform, will stick broadly to deficit reduction plans set out last year under which a record budget deficit running close to 10 percent of national output will fall sharply by the next election in 2015.

However, the independent Office for Budget Responsibility is likely to downgrade its 2.1 percent 2011 growth forecast, which could affect borrowing slightly in coming years and will encourage critics of the government’s planned spending cuts.

Chief Secretary to the Treasury Danny Alexander, in an article for The Observer newspaper, said the Conservative-Liberal Democrat coalition would “set out further real terms progress towards our goal of taking anyone earning less than 10,000 pounds out of tax altogether”.

The coalition has already raised the personal allowance threshold for income tax, up to which no tax is paid, to 7,475 pounds from 6,475 pounds. The budget on Wednesday is expected to lift it to around 8,000 pounds.

Writing in the News Of The World newspaper, Chancellor George Osborne said it would be a “disaster” if he abandoned his austerity plan, but said the budget would still help to create the conditions for recovery and support those in need.

“I’ll be using some of the money our new government has raised from taxing the banks to create the most apprenticeships this country has ever seen, and a big expansion of work experience places,” Osborne said.

LONDON (Reuters) – Britain’s budget next week will exempt more workers from income tax and use bank levy money to help young people train for jobs, ministers said on Saturday.

The budget, billed as pro-growth and pro-reform, will stick broadly to deficit reduction plans set out last year under which a record budget deficit running close to 10 percent of national output will fall sharply by the next election in 2015. However, the independent Office for Budget Responsibility is likely to downgrade its 2.1 percent 2011 growth forecast, which could affect borrowing slightly in coming years and will encourage critics of the government’s planned spending cuts.

Chief Secretary to the Treasury Danny Alexander, in an article for The Observer newspaper, said the Conservative-Liberal Democrat coalition would “set out further real terms progress towards our goal of taking anyone earning less than 10,000 pounds out of tax altogether.”

The coalition has already raised the personal allowance threshold for income tax, up to which no tax is paid, to 7,475 pounds from 6,475 pounds. The budget on Wednesday is expected to lift it to around 8,000 pounds.

Writing in the News Of The World newspaper, finance minister George Osborne said it would be a “disaster” if he abandoned his austerity plan, but said the budget would still help to create the conditions for recovery and support those in need.

“I’ll be using some of the money our new government has raised from taxing the banks to create the most apprenticeships this country has ever seen, and a big expansion of work experience places,” Osborne said.

The youth package is expected to total 300 million pounds, divided between 50,000 new apprenticeships and 100,000 work experience places. The bank tax will yield 2.5 billion pounds per year.

LONDON (Reuters) – British Prime Minister David Cameron gave a cautious reaction to a ceasefire declaration from Libya on Friday, saying its leader Muammar Gaddafi would be judged by actions not words.

Cameron had earlier told parliament Britain was starting to move fighter jets to bases from where they can help enforce a no fly zone over Libya.

Gaddafi’s government then said it was halting military operations after the United Nations passed a resolution authorizing military action against it.

“We will judge him by his actions not his words,” Cameron told BBC TV.

“What is absolutely clear is the U.N. Security Council resolution said he must stop what he is doing, brutalizing his people. If not, all necessary measures can follow to make him stop.

“That is what we agreed last night, that is what we are preparing for and we’ll judge him by what he does.”

Speaking earlier to parliament, Cameron said the international community would soon set out what it expected from Gaddafi.

LONDON (Reuters) – Britain’s government has promised that next week’s budget will be the most “pro-growth” in a generation, but its commitment to swingeing spending cuts over the next five years leaves little room for manoeuvre.

With fiscal tightening — not stimulus — the order of the day, the government is likely to focus on micro measures such as cutting red tape, encouraging small businesses and giving tax breaks for entrepreneurs to speed recovery.

It will be a hard sell.

Chancellor George Osborne is likely to deliver his “budget for growth” on Wednesday alongside a downwardly revised 2011 growth forecast from the independent Office for Budget Responsibility and facing the prospect of higher interest rates.

The government has staked its reputation on eliminating the budget deficit, which has swollen to 10 percent of GDP, by the time of the next election in 2015. The fate of both coalition partners — Conservatives and Liberal Democrats — also rests on what state the economy is in four years down the line.

Despite soaring oil prices, an increasingly uncertain geopolitical backdrop, and the fact that such a tough austerity drive is bound to hold back growth, the government is in no mood to backtrack.

“There is still political motivation to press ahead with spending cuts while they can be most readily blamed on the previous administration,” said Roger Bootle, economic adviser to big-four accounting firm Deloitte. “The big squeeze is still coming.”

LONDON (Reuters) – The government has promised that next week’s budget will be the most “pro-growth” in a generation, but its commitment to swingeing spending cuts over the next five years leaves little room for manoeuvre.

With fiscal tightening — not stimulus — the order of the day, the government is likely to focus on micro measures such as cutting red tape, encouraging small businesses and giving tax breaks for entrepreneurs to speed recovery.

It will be a hard sell.

Chancellor George Osborne is likely to deliver his “budget for growth” on Wednesday alongside a downwardly revised 2011 growth forecast from the independent Office for Budget Responsibility and facing the prospect of higher interest rates.

The government has staked its reputation on eliminating the budget deficit, which has swollen to 10 percent of GDP, by the time of the next election in 2015. The fate of both coalition partners — Conservatives and Liberal Democrats — also rests on what state the economy is in four years down the line.

Despite soaring oil prices, an increasingly uncertain geopolitical backdrop, and the fact that such a tough austerity drive is bound to hold back growth, the government is in no mood to backtrack.

“There is still political motivation to press ahead with spending cuts while they can be most readily blamed on the previous administration,” said Roger Bootle, economic adviser to big-four accounting firm Deloitte. “The big squeeze is still coming.”

SHEFFIELD, England (Reuters) – The Liberal Democrats have survived a spectacular fall in popularity since joining a Conservative-led government but are determined to hold the coalition together despite the potential electoral costs.

While some doubted the partnership would last, the Lib Dems are adapting to the unpopularity that goes with power, hoping by the next election in 2015 voters will have come to respect the party for helping to guide the economy back to health.

Protesters verbally abused delegates outside the party’s spring conference in the northern English city of Sheffield this weekend, but the atmosphere inside was far from gloomy, even if there was soul searching over spending cuts and policy u-turns.

“We are heading into a different political world where coalition will be seen as a more normal and sensible way of running government — that’s one of the reason we’re determined to make a success of this,” business minister Vince Cable told Reuters on the sidelines of the event.

“The key is, if we see this (economic) crisis through, and are seen to be successful in turning this country round, I think the support will be there. We just have to show resilience and stamina.”

The centrist Lib Dems and their leader Nick Clegg gained support prior to the May 2010 election by appealing to those disillusioned with the larger Conservatives and Labour parties.

But Clegg and his party have since felt the full brunt of anger over tough austerity measures as the government seeks to slay a record budget deficit running close to 10 percent of national output.

SHEFFIELD (Reuters) – Deputy Prime Minister Nick Clegg told Liberal Democrats on Sunday to hold their nerve ahead of difficult local elections and a key voting referendum whose outcome could strain the 10-month-old coalition.

“These are testing times for us as a party,” Clegg said as he closed a party conference in Sheffield held under the tightest security ever seen for a Liberal Democrat rally.

He was speaking a day after 3,000 demonstrators angry at government spending cuts had protested outside the central city hall where party members were protected by a 8-foot (2.5-metre) steel fence and a phalanx of police officers.

The party’s poll rating has more than halved to about 10 percent since joining the larger Conservatives in coalition following last May’s inconclusive general election.

“Yes, we’ve had to toughen up. But we will never lose our soul,” Clegg said.

Analysts expect the Lib Dems to do badly in local elections in eight weeks’ time as former supporters abandon them for joining a government committed to steep cuts in public spending to tackle a record budget deficit.

The party has also lost credibility with many voters after abandoning its pre-election pledge to abolish university fees and instead supporting a near tripling in charges.

SHEFFIELD, England (Reuters) – The government will stick to its plans to slay a record deficit in the budget this month, a senior minister told Reuters on Saturday, indicating there is little, if any, room to support growth via tax cuts or spending.

The coalition government announced a tough austerity package last year to all but eliminate a budget deficit of about 10 percent of national output by the time of the next election in 2015.

Critics have argued that such a harsh plan, which takes effect in April, may choke off an already uncertain economic recovery, given that the Bank of England seems to be edging towards raising interest rates to tame above-target inflation.

There has been some speculation on financial markets that any extra windfalls for the Treasury, perhaps from any better-than-expected borrowing figures, could be spent on boosting growth rather than paying down the deficit faster.

Lib Dem Chief Secretary to the Treasury Danny Alexander — number two to Conservative Chancellor George Osborne — said in an interview at the party’s spring conference the March 23 budget will include “a whole range of new ideas” to lift growth.

But he indicated those solutions would focus on reducing red tape in areas such as planning and regulation.

“We are looking to do everything we can to support and encourage growth and, of course, that isn’t all about tax and spending because we’ve got a huge problem with our public finances that we have to sort out,” Alexander said .

SHEFFIELD, England (Reuters) – Aggressive lobbying will not compromise decisions on banking sector reform, British business minister Vince Cable told Reuters on Saturday, warning that policymakers had to deal with the “too big to fail” issue.

Britain’s Conservative-Liberal Democrat coalition government has asked an independent banking commission to look into how to reform banks to protect the taxpayer and the economy from any future financial crises.

At the heart of the review, the final findings of which are due later this year, will be an assessment of whether banks should be forced to separate their retail and investment operations. An interim report is expected in April.

“I’m pretty confident that we’ve got a very robust, strong process that will not be deflected by lobbying,” Cable said in an interview at the Liberal Democrat spring conference in the northern English city of Sheffield.

“I’m pretty confident that there will be recommendations that the government will feel able to act on because it’s produced with a high level of authority.”

Banks have warned the government that too harsh an approach could harm London’s position as a financial hub.

There has been some speculation that an agreement between the government and bankers — the so-called Merlin deal — over lending, bonuses and tax earlier this year could lead to a watered-down reform package.

SHEFFIELD, England (Reuters) – Deputy Prime Minister Nick Clegg said on Friday he wanted to “wring the neck” of bankers who award themselves big bonuses so soon after being bailed out by the government during the financial crisis.

Clegg, leader of the Liberal Democrats and the son of a banker, also called financial market players “terrifying people in pinstripe suits” and said Britain needed “to look at the basic structure of banking.”

The strong comments come ahead of a LibDem conference this weekend at which Clegg must rally a party that has suffered a large slump in popularity since signing up to a coalition government with the larger Conservatives in May.

“It’s a red rag to my bull,” Clegg said in an interview with BBC Radio Sheffield, in response to a question on bank bonuses.

“I’m like everybody else — you want to wring the neck of these wretched people who behaved so irresponsibly and we’re now having to bail them out.”

Britain, having to slash public spending to tackle a record budget deficit which ballooned during the financial crisis, imposed a one-off bonus tax on bankers last year and has since introduced a levy on balance sheets.

However, efforts to persuade the banks to show more restraint over pay as millions of public sector workers face a two-year pay freeze and widespread job losses have failed to have much impact.