Britain readies for fresh austerity budget

British finance minister George Osborne was Wednesday set to stick firmly to the government's controversial austerity plan when he presents his annual budget to parliament despite a promise to spend on infrastructure.

Chancellor of the Exchequer Osborne, whose Conservative party heads a coalition government with the Liberal Democrats, presents his 2013-14 budget to parliament at 1230 GMT, as tens of thousands of state workers stage a strike and after official data revealed a first rise in British unemployment for a year.

"Today I'll present a budget that tackles the economy's problems head on helping those who want to work hard and get on," Osborne said in his first ever tweet on Wednesday as Britain sails close to another recession.

Analysts expect the chancellor to say that he is sticking to his so-called Plan A of driving down the record budget deficit inherited from the previous Labour administration in 2010 -- despite calls from both inside and outside the government to curb massive spending cuts to kick-start the economy.

On the eve of the budget announcement, Prime Minister David Cameron's Downing Street office said some government departments would be made to cut their budgets to save £2.5 billion ($3.8 billion, 2.9 billion euros) over the next two years.

The money saved between now and 2015 -- the time of the next general election -- would be used on infrastructure spending, a spokesman said.

The decision is at odds with Business Secretary Vince Cable, who has called on the government to consider borrowing more to stimulate economic growth.

Cable, a leading Liberal Democrat, said that the danger of slow growth may now be more damaging than the loss of confidence through increased borrowing.

But Cameron earlier this month insisted that his government, which passed the mid-term mark in January, would stick to the path of austerity despite a turbulent few weeks that saw Britain stripped of its top-level AAA credit rating.

In a further blow to the prime minister, civil servants were Wednesday holding a 24-hour strike in a row over pay and other working conditions.

The Public and Commercial Services union said up to 250,000 of its members would join the walkout, hitting government departments, jobcentres, tax offices, border patrols and courts.

On Tuesday meanwhile, a poll by ITV News showed that more than four out of 10 voters believe Osborne should be sacked.

Britain's economy stands on the brink of a so-called triple dip recession after gross domestic product (GDP) shrank 0.3 percent in the final three months of last year.

Another contraction in the current first quarter would place it in the third recession since the 2008 global financial crisis, something which business leaders are eager to avoid.

On Wednesday, Osborne was expected to also revise the government's growth and budget-deficit forecasts to better reflect Britain's present economic woes.

The government suffered a major embarrassment last month when Moody's ratings agency downgraded Britain's credit assessment by one notch to Aa1, arguing that state debt was still mounting and growth was too weak to reverse the trend before 2016.

The opposition Labour party described the downgrade as a "humiliation" for the chancellor, who had made safeguarding the triple-A rating a key test of his policies.

Labour meanwhile argued that the coalition was cutting too hard and too fast, thereby choking off the recovery.

Markets were also waiting on Wednesday to see whether Osborne uses the budget to announce changes to the Bank of England's inflation target to boost the economy.

The chancellor traditionally uses the budget to state the central bank's policy mandate, which for many years has been to meet an inflation target of 2.0 percent.

Incoming Bank of England governor Mark Carney, the Canadian central bank chief who takes up his role in July, has suggested that economic output might be a better target measure than inflation.

Meanwhile minutes of a recent policy meeting published Wednesday revealed that the BoE's outgoing boss Mervyn King voted unsuccessfully for the central bank to pump out another £25 billion of 'quantitative easing' cash stimulus to boost Britain's ailing economy.