Finance minister George Osborne warned Britons that theyfaced an extra year of austerity measures and insisted that reversing hisbelt-tightening measures now would be a "disaster".
Chancellor of the Exchequer Osborne said Britain would facespending cuts and tax hikes until 2018 -- after the coalition government led byPrime Minister David Cameron had already previously extended the programme bytwo years to 2017.
The bleak announcement in a budget update, coming alongsidenews that the government is slashing its outlook for economic growth, is likelyto heap further pressure on the administration mid-way through a five-year termin power.
Addressing parliament on Wednesday, Osborne also admittedthat the government would fail to meet its official target for reducing publicdebt as a proportion of British economic output by 2015-16.
"It is taking time but the British economy is healingafter the biggest financial crash in our lifetime," Osborne insisted inhis Autumn Statement.
Confirming that he was prolonging the government's austerityprogramme to 2017-18 -- beyond Britain's next general election due in 2015 --Osborne said: "We are making progress. It's a hard road, but we aregetting there. Britain is on the right track and turning back now would be adisaster."
Explaining why he was extending cuts in public spending andhiking taxes again, Osborne said the British economy faced "deep-seatedproblems at home and abroad."
Britain's Conservative-Liberal Democrat coalitiongovernment, which came to power in 2010, has imposed a series of painfulausterity measures to slash a record deficit that was inherited from theprevious Labour administration.
Cameron and Osborne have overseen the loss of tens ofthousands of public-sector jobs, slashing workforces in the military, healthservice and various state departments.
The government has also faced huge demonstrations fromdisgruntled workers ans students in response to the cuts.
The main opposition Labour party said Osborne's economicplans were "in tatters".
The party's finance spokesman Ed Balls said: "Today,after two and a half years, we can see, people can feel in the country, thetrue scale of this government's economic failure.
"Our economy this year is contracting, (and) thechancellor has confirmed government borrowing is revised up this year, next yearand every year."
Britain meanwhile slashed its economic outlook, forecastingthe economy would shrink by 0.1 percent this year and then return to growth in2013, according to figures published alongside the budget update.
The new forecast, issued by the Office for BudgetResponsibility (OBR) fiscal watchdog, showed a sharp drop on the previous 2012growth estimate of 0.8 percent that was given in Osborne's annual budget inMarch.
The OBR added that British gross domestic product wasforecast to grow by 1.2 percent in 2013. That compared with previous guidancefor greater expansion of 2.0 percent.
Osborne also revealed that debt as a proportion of grossdomestic product (GDP) was now expected to fall in 2016-17 -- a year later thanthe government's previous forecast.
Recent official data showed that Britain had escaped fromrecession in the third quarter of this year, with its economy growing by arobust 1.0 percent.
However the return to growth was owing to one-off factors suchas the London Olympics and rebounding activity after public holidays in thesecond quarter.
"The message... is that we are making progress,"Osborne said.
Osborne had some positive news for motorists and businesses,postponing a hike in fuel tax due to have come into force in January and sayinghe would cut corporation tax by one percentage point to 21 percent in 2014.
The coalition has blamed the recession largely on the debtcrisis in the neighbouring eurozone, but the main opposition Labour party claimsthat the downturn was mainly owing to the hefty cuts in state spending.
On the eve of the budget update, Osborne pledged to invest£5.0 billion (6 billion euros, $8 billion) in schools, transport and scienceover the next two fiscal years, with the cash sourced from a new raft ofspending cuts across most civil service departments.
And on Monday, Osborne launched a campaign against "taxdodgers" and "cowboy advisers" to claw back £2.0 billion a year,as lawmakers alleged that multinationals such as Starbucks and Google areavoiding huge tax bills.
