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'87 budget boosts Thatcher's stock

Britain's chancellor of the exchequer, Nigel Lawson, yesterday unveiled a prudent budget in which there were few surprises. But it did little to remove the suspicion that the government of Prime Minister Margaret Thatcher had put forward a budget which, by cutting income tax and adding no indirect taxes, would strengthen the government's hand in the event an election is called this year. (British elections are scheduled for the summer of 1988, but Mrs. Thatcher and her Conservative Party are riding high in the polls, and she is thought likely to call elections in June.)

Highlights include:

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Review of the state of the economy:

Seventh year of successive growth.

Fifth year of low inflation.

Exports up 6 percent the first quarter over last year, out-performing all other major economies.

Balance-of-payments deficit: 2.5 billion ($4 billion).


Inflation forecast up 0.5 percent to 4 percent in 1987-88.

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Government borrowing target cut by 3 billion ($4.8 billion) from $11.2 to $6.4 billion - 1 percent of gross domestic product. The effect will be to encourage a 1 percent fall in interest rates. Mortgage-rate cut likely to follow.

Tax benefits:

Basic income tax cut from 29 pence to 27 pence in the pound.

All other tax thresholds and allowances raised in line with inflation.

Indirect taxes: No increases in gasoline, beer, wine, spirits, or cigarettes.

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