We know driving our economy forward when faced with the headwinds blowing in from the Eurozone is a formidable task. It's going to take time. Everyone knows there is no easy or painless way out of the mess we inherited, but we are facing up to our responsibilities – dealing with our debts and building an economy that rewards the people who work hard and want to get on.

These are difficult economic times, but thanks to the tough decisions we have taken, our economy is now healing. Jobs are being created – over a million in the private sector since the election. We have cut the deficit by a quarter since this Government took office.

We are making progress, but it is taking time and there is no easy route to recovery. We've got to do the hard work of getting the deficit down, making our country more competitive, and ensuring that in the 21st Century Britain is able to pay its way in the world.

The bigger picture

George Osborne• Over the last two years, this Government has cut the record budget deficit it inherited from Labour by a quarter.

• Since the general election, the private sector has created over 1 million new jobs – well over two new jobs in the private sector for every one job lost in the public sector.

• Our borrowing costs have fallen to record lows, showing that UK government debt is seen as a safe haven in the global debt storm and saving money for taxpayers, businesses and families.

• We have used the strength of our balance sheet to set up the unlimited Funding for Lending Scheme and a package of infrastructure guarantees worth £50 billion.

Getting borrowing under control to deal with our debts

Action to date

• Dealing with our debts means we have had to take tough decisions. But we are making progress: in the two years since we came to office, we’ve already cleared one quarter of the deficit left by Labour.

• Our plan is backed by the IMF, the OECD, the Bank of England, the CBI, the Institute of Directors and the British Chamber of Commerce.

• We published an emergency Budget as soon as we came to power in June 2010, which brought our economy back from the brink and restored the trust of the financial markets. Our Spending Review later that year then set out our credible plan to get the deficit down.

• We have been relentless in cutting government waste. In the last year alone, we have cut £5.5 billion in waste from Whitehall. And we have faced up to the tough decisions we need to take: like decisions on welfare reform, on policing, on public sector pensions. These decisions are not easy, but they are essential for Britain’s economy to recover. The last thing you can do to get yourself out of a debt crisis is to borrow more.

Planned actions

• We will carry on taking the tough decisions necessary to get our economy back on track.

• In our Spending Review, we set out spending plans up to 2014/15. Since then, the Chancellor has confirmed that we are on track to eliminate the record structural deficit left by the last government by 2016/17.

Build a recovery on real growth and investment – not debt

Action to date

We know we must stretch every sinew for growth to provide jobs and opportunities, but it must be real growth that will last, based on a more efficient, business-friendly and rebalanced economy. That is why we have:

  • Cut corporation tax to 24 per cent with a plan to bring it down to 22 per cent by 2014.
  • Stopped Labour's Jobs Tax.
  • Launched a Funding for Lending scheme backed by the Bank of England to kick-start lending to businesses and households in the real economy.
  • Saved businesses £3.3 billion a year in slashed red tape.
  • Set up the Regional Growth Fund to boost growth in the regions after a decade of neglect under Labour.
  • Created 24 new Enterprise zones, which benefit from measures including up to 100 per cent business rate discounts, simplified planning regulations, and new superfast broadband.

Planned actions

Our solution is about getting the banks lending. It's about creating the most competitive business tax regime in the developed world. It's about helping small businesses and freeing them from unnecessary bureaucracy. It's about supporting business investment through the Regional Growth Fund, and Enterprise Zones. That is why we are:

  • Delivering billions in infrastructure investment – including £9 billion in rail investment and a comprehensive national infrastructure plan identifying over 500 infrastructure projects.
  • Using our hard-earned credibility and low interest rates to guarantee finance for nationally important infrastructure projects.
  • Creating a stable, competitive tax system.
  • Slashing Red Tape through the Red Tape Challenge.
  • Reforming planning and employment regulations to free up businesses and households.
  • Opening up access to finance.
Being on the side of people who work hard and want to get on in life

Action to date

This Government knows that times are tough for everyone. That is why we have taken action and cut income tax, fuel duty and council tax for millions of people.

  • We are cutting income tax for 25 million people. Most basic rate taxpayers will be £546 a year better off.
  • We have taken 1.1 million of the lowest paid workers out of income tax altogether.
  • We have cut and frozen the rises to fuel duty that Labour legislated for – saving families £159 by the end of the year in fuel costs.
  • We have frozen council tax for two years – giving households a real-terms cut this year.

And we believe that people who work hard and do the right thing should be rewarded. So we have introduced a cap on benefits so that no one can get more on benefits than the average family earns in work.

Planned actions

• We are cutting income tax for the third year running – by April 2013 this Government will have cut income tax for 25 million people and lifted 2 million people out of income tax altogether. Most basic rate taxpayers will be £546 a year better off.

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