Britain's Budget an Example for the G-20

With trepidation, many countries signed on to the G20 Toronto commitment to halve their deficits in three years. Britain is proving to be an instructive example on how to tackle the challenge, while undertaking other major economic reforms. The undertaking is all the more remarkable because it is being led by a coalition government of two parties with strikingly different ideologies.

British Chancellor George Osborne, a Conservative, called it an emergency budget, but it has the hallmarks of a transformational one as well. The government is aggressively reining in public spending while inflicting as little pain as possible on the most vulnerable. Savings come from a public-sector pay freeze (hitting all but the poorest workers), an elimination of middle-class tax credits and an indexation of other benefits to inflation.