UK Government To Cut Welfare Budget Again As Election Approaches

British finance minister George Osborne heralds further cuts to the UK's spending on welfare after next year's general election.

BIRMINGHAM, ENGLAND, UNITED KINGDOM (JANUARY 6, 2014) (POOL) - British finance minister George Osborne pointed to further major cuts to the country's welfare spending on Monday (January 6).

Britain's welfare system could not be protected from further big cuts which would amount to 25 billion pounds (40.9 billion USD) in the first two years of the next parliament, after the election in May 2015, Osborne said."So we have got to make more cuts -- 17 billion pounds this coming year, 20 billion pounds next year, and over 25 billion pounds further across the two years after that," the minister said in a speech at a car-parts plant in Birmingham, central England.

The Conservatives continue to lag behind the opposition Labour party in opinion polls. But they score more highly for economic policy and they regularly blame Labour for running up a budget deficit equivalent to 11 percent of gross domestic product before it lost power in the 2010 election.

A surprisingly strong recovery in the economy last year turned Britain from a laggard to a leader in growth terms among the world's big rich nations, though overall output is still below pre-crisis levels.

The year-on-year figures for quarterly growth from July-September showed 1.5 percent growth in GDP for 2013 over 2012.

A survey on Monday showed growth in Britain's dominant services sector slowed unexpectedly in December, but confidence rose and the economy still looks likely to have recorded its strongest expansion since 2007 last year.

With an election due in 16 months and the government facing calls to put more money in people's pockets after years of austerity, Osborne stuck to his message that the only way to return the economy to health is to fix its finances.

But Osborne warned voters that the economic recovery could not be taken for granted.

"As we start the New Year, I want to warn you about a dangerous new complacency around at the moment," he said.

"You hear some talking as if the hard part of the job is done, and we can go back to the bad old habits."

In his speech, Osborne warned that the euro zone's troubles and a continuing repair of Britain's banking system still posed risks to the recovery and he underscored the need for more belt-tightening.

As well as facing criticism from Labour for the decline in living standards since the financial crisis, Osborne is under pressure from some members of his Conservative party to cut income taxes more aggressively.

He highlighted how the government has raised the tax-free allowance for many earners but suggested he would not be rushing to make further tax cuts.

"If government wants to find a direct way to put money into people's pockets, you do that by permanently cutting people's taxes by permanently cutting the spending those taxes pay for."

Prime Minister David Cameron sought to steal a march on his rivals in next year's election on Sunday, pledging that he would continue to ensure pensions rose faster than wages.