BUDGET SEEN PAVING WAY FOR EARLY U.K. ELECTION
The budget presented by Chancellor of
the Exchequer Nigel Lawson was described by MPs and analysts as
being politically astute, combining tax cuts and fiscal
prudence which promised to boost the Conservative government's
standing with both voters and financial markets.
    The 1987/88 budget contained a two-penny cut in the
standard rate of tax, and a three billion stg reduction in the
Public Sector Borrowing Requirement (PSBR), to 4.0 billion stg.
    Parliamentarians said the budget would pave the way for a
fall in domestic interest rates and an early election.
    Conservative MP Anthony Beaumont-Dark said the budget "is
not glamourous - but it is sound and sensible."
    Lawson told journalists later that it was "a budget built on
success, for success."
    But opposition MPs did not agree .
    David Steel, leader of the Liberal Party, said "this was a
strangely deceptive budget.
    The Chancellor had six billion stg to give back - he has
chosen to give half of that to reducing the PSBR, whereas we in
the SDP/Liberal Aliance think it would have been wiser to use
those revenues to reduce unemployment and alleviate poverty."
    Steel said "the cunning thing in this seductive budget is
that all the good things will come in the pre-election period -
the fall in interest rates, the fall in mortgage rates, the
lower income tax, relatively cheaper whisky, beer, cigarettes
and petrol."
    David Owen, the leader of the Social Democratic Party (SDP)
which with the Liberals make up the centrist Alliance grouping,
said "this is a good attempt at an electioneering budget but it
has failed in its objective. It has given money to the "haves" as
opposed to the "have-nots."
    Labour leader Neil Kinnock called it "a bribes budget."
    Kinnock said the budget "had little to do with the general
good, and everything to do with the general election."
    Roy Hattersley, the Labour Party's Treasury spokesman, said
"the Tories should have used available resources to invest in
industry, in health and in education."
    He added that "we know that whoever is elected (to power in
the next general election) will reverse these tax cuts."
    But Lawson rejected that. Rather, he said the Treasury
expected to have at least 3.0 billion stg in fiscal 1988/89 for
use in cutting taxes or raising public spending.
    Lawson rejected claims by opposition MPs that the
government would be forced to call an election by a
deteriorating economy.
    In his financial statement to Parliament, Lawson had said
that "the setting for this year's budget is more favourable than
it has been for many years. We are now entering our seventh
year of steady growth and the fifth in which this has been
combined with low inflation. The public finances are sound and
strong, and unemployment is falling."
    He said that "these are the fruits of the government's
determination, in bad times as well as good, to hold firmly to
our policies of sound money and free markets."
    Lawson later said the Government felt no compulsion to
plump for an early election.
    Asked by political journalists what effect the Budget would
have on election timing, he replied "I think we will hold the
election either late or early. I must confess I am rather
relaxed about it all.
    "There is not any compulsion to go for an early election.
    But he added that "if the Prime Minister decides to go for
an early election, it will bring to an end all this rather
ridiculous pre-election atmosphere and fever - and there is
something to be said for that."
    Industry also welcomed Lawson's budget. Confederation of
British Industry (CBI) President David Nickson said "This budget
will reinforce business success. Lower government borrowing
means lower interst rates for business. This is what the CBI
wanted."
    "We have always said we would judge the budget on how it
affects the cost of borrowing. This should do the trick."
 REUTER
