George Osborne slashes growth prediction as he reveals the British economy will shrink again (VIDEO)

Dec 5 2012 By Cheryl Mullin

Mr Osborne said the period of austerity would be extended by another year to 2017/18 – taking the squeeze on the public finances well into the next parliament.

But he hailed a crackdown on tax avoidance by big companies and wealthy individuals.

He said: “Hundreds of millions of pounds of tax loopholes are being closed with immediate effect, and we are investigating abusive use of partnerships.

“HMRC will not have its budget cut over the next two years, unlike other departments.

“Instead we will spend £77 million more on fighting tax avoidance – and not just for wealthy individuals.”

He said measures announced today would raise £2 billion more for the exchequer.

He again ruled out a mansion tax but confirmed plans to cut tax allowances for big pension pots.

He said that from 2014-15, the lifetime allowance would be cut from £1.5 million to £1.25 million and the annual allowance from £50,000 to £40,000, saving £1 billion a year by 2016-17.

He told MPs: “I know these tax measures will not be welcomed by all; ways to reduce the deficit never are.

But we must show we’re all in this together. When you’re looking for savings, I think it’s fair to look at the tax relief we give to the top 2%.”