LONDON, 7 December 2006 — Chancellor of the Exchequer Gordon Brown revealed that Britain’s economy is growing faster than anticipated in an annual address to Parliament yesterday, boosting his credentials as the likely successor to Prime Minister Tony Blair.
Brown also said taxes on road fuel would rise by 1.25 pence per liter from midnight — after years of freezes to placate a powerful motoring lobby.
Delivering his 10th pre-budget report to Parliament, he said though that he would not restore the fuel escalator.
The government had postponed an earlier increase scheduled for September. Petrol duty currently raises about 24 billion pounds.
Brown raised his forecast for 2006 economic growth to 2.75 percent, a significant lift from the 2.25 percent he predicted in his March budget.
He maintained his growth forecasts of 2.75 percent to 3.25 percent for both 2007 and 2008. That is in line with the Bank of England’s growth projections of 3.0 percent in 2007 and 2.9 percent in 2008.
The boost in the economic growth forecast is a turnaround from last year, when Brown was forced into an embarrassing downgrading of his growth predictions after months of warnings from economists that he was being too optimistic.
Brown cited strong business investment and rising exports as the reason for the growth upgrade.
“Growth in 2006 will surpass (the budget forecast) at 2.75 percent,” Brown said.
The revision was the centerpiece of a report that is being viewed largely as a political manifesto for a leader-in-waiting. Brown is widely seen as the natural successor to Blair, who has made public his intention to step down as prime minister next year.
Brown said measures in his report would enable Britain to “meet the global challenges and unleash the potential of the British people.” He outlined a series of measures focusing on improving education, which Brown said was vital for Britain to meet challenges from emerging economic powerhouses such as China and India.
Universities will receive 60 million pounds ($120 million) a year for applied research with commercial potential to help British science to transform knowledge into new jobs.
Brown also announced a number of environmentally friendly measures, including an increase in fuel duty and a rise in air passenger duty. Domestically, he pledged that every new home would be carbon free in 10 years.
Brown said the government’s 2 percent inflation target would be met in mid-2007 and remain on target in 2008.
