At his "Autumn statement" on Wednesday, Osborne is expected to defend his stringent economic policies as the only credible way of solving the government's biggest political problem - its failure to deliver a strong recovery. "It's clearly taking longer to deal with Britain's debts, it's clearly taking longer to recover from the financial crisis than anyone would have hoped, but to turn back now would be a complete disaster for our country," he said in a BBC television interview.
Economists speculate Osborne will have to find substantial new savings to meet one of his debt-reduction goals, removing Britain's underlying budget deficit. British media reported on Sunday that Osborne planned to reduce the amount very high earners can put tax-free into private pensions each year alongside reining in the welfare budget.
Reducing the amount of money people can pay into their pensions with tax relief could raise up to 1.8 billion pounds ($2.88 billion), according to the Sunday Times. Osborne declined to comment on the reports, but did not reject the proposals directly when questioned in the interview. Shadow finance minister Ed Balls advocates a slower rate of deficit reduction, citing high unemployment as one of the negative consequences of Osborne's austerity drive.
The failure of Prime Minister David Cameron's government to nurse the economy back to strong growth after the financial crisis has fuelled attacks from Labour, which polls show would regain power if an election were held now.