Govt: Economy 'could be worse'

The Chancellor George Osborne has told ITV's Daybreak that the country's economic problems "could be a lot worse", referring to the situation in Cyprus, as he defended his Budget plans to kickstart the recovery.

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Ed Balls calls for income tax cut to boost economy

Ed Balls has called for emergency tax cuts in next week's Budget, saying Labour would welcome a cut in the basic rate of income tax to boost the economy.

Chancellor George Osborne is under pressure from some Conservative MPs to make bold tax moves on Wednesday in a bid to kick-start the UK's fiscal fortunes.

Shadow Chancellor Ed Balls has called for income tax to be cut in next week's Budget. Credit: Peter Byrne/PA Wire

In an interview with The Daily Telegraph, Mr Balls said temporary borrowing to fund a cut in the basic rate of income tax would pay for itself.

"Something must be done now" as Britain is facing an economic depression "like the 1930s", the shadow chancellor told the newspaper.

"If George Osborne announced a temporary cut in the basic rate we would applaud him because we would say, 'At last he is finally doing something to get some spending power back into the economy'", he added.

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