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HIGHLIGHTS-UK's Osborne delivers annual budget to parliament

LONDON, March 16 (Reuters) - British finance minister George Osborne delivered his annual budget statement to parliament on Wednesday.

Below are highlights from his speech:

ON GLOBAL RISKS

"Financial markets are turbulent. Productivity growth across the west is too low. And the outlook for the global economy is weak. It (Other OTC: ITGL - news) makes for a dangerous cocktail of risks."

ON OBR FORECASTS

"The OBR (Office of Budget Responsibility) tell us today that in every year of the forecast our economy grows and so too does our productivity. But they have revised down growth in the world economy and in world trade. In their words, the outlook is "materially weaker".

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"The most significant change the OBR have made since their November forecast is their decision to revise down potential UK productivity growth.

"Let me give the OBR's latest forecasts for our economic growth - in the face of the new assessment of productivity and the slowing global economy. Last year, GDP grew by 2.2 percent. The OBR now forecast it will grow by 2 percent this year, then 2.2 percent again in 2017, and then 2.1 percent in each of the three years after that."

ON BREXIT

"The OBR correctly stay out of the political debate and do not assess the long term costs and benefits of EU membership.

"But they do say this, and I quote them directly: 'a vote to leave in the forthcoming referendum could usher in an extended period of uncertainty regarding the precise terms of the UK's future relationship with the EU.

"This could have negative implications for activity via business and consumer confidence and might result in greater volatility in financial and other asset markets'."

"Britain will be stronger, safer and better off inside a reformed European Union. I believe we should not put at risk all the hard work that the British people have done to make our country strong again.

ON INFLATION TARGETS

"In today's forecast real wages continue to grow and outstrip inflation in each and every year.

"The OBR forecasts lower inflation, at 0.7 percent this year and 1.6 percent next year. I am today confirming in a letter to the Governor of the Bank of England that the remit for the Monetary Policy Committee remains the symmetric CPI (Other OTC: CPICQ - news) inflation target of 2 percent."

ON THE DEBT

"The country will be spending no more than the country raises in taxes.

"Debt falls to 82.6 percent next year, then 81.3 percent in 2017-18, then 79.9 percent the year after. In 2019-20, it falls again to 77.2 percent, then down again the year after to 74.7 percent."

ON THE DEFICIT

"When I became Chancellor, the deficit was forecast to reach 11.1 percent of national income - the highest level in the peacetime history of Britain.

"Thanks to our sustained action, the deficit is forecast to fall next year to just over a quarter of that - at 2.9 percent. In 2017-18, it falls to 1.9 percent. Then it falls again to 1.0 percent in 2018-19.

"Indeed our borrowing this year is actually lower than the OBR forecast at the Autumn Statement. Borrowing continues to fall - but not by as much as before - to 55.5 billion pounds next year, 38.8 billion pounds the year after that and 21.4 billion pounds in 2018-19."

ON CORPORATION TAX CUTS

"We'll do what other countries do and restrict the maximum amount of profits that can be offset using past losses to 50 percent. This will only apply to the less than 1 percent of firms making profits over 5 million pounds - and the existing rules for historic losses in the banking sector will be tightened to 25 percent.

"Corporation tax was 28 percent at the start of the last Parliament and we reduced it so that it's 20 percent at the start of this one. Last summer I set out a plan to cut it to 18 percent in coming years.

"Today I am going further. By April 2020 it will fall to 17 percent. Britain is blazing a trail."

ON BUSINESS RATES

"We will radically simplify the administration of business rates, and from 2020, switch the uprating from the higher RPI to the lower CPI.

"The new threshold for small business rate relief will rise from 6,000 pounds to a maximum threshold of 15,000 pounds. I'm also going to raise the threshold for the higher rate from 18,000 pounds to 51,000 pounds.

"Let me explain to the House what this means. From April next year, 600,000 small businesses will pay no business rates at all. That's an annual saving for them of up to nearly 6,000 pounds - forever. A further quarter of a million businesses will see their rates cut."

ON OIL AND GAS

"I am today cutting in half the Supplementary Charge on oil and gas from 20 percent to 10 percent. And I'm effectively abolishing Petroleum Revenue Tax too."

ON TAX, PENSIONS AND ISAS

"To help the self-employed I'm going to fulfil the manifesto commitment we made, and from 2018 abolish Class 2 National Insurance Contributions altogether. That's a simpler tax system and a tax cut of over 130 pounds for each of Britain's 3 million strong army of the self-employed.

"From April next year I am going to increase the ISA limit from just over 15,000 pounds to 20,000 pounds a year for everyone.

"For those under 40, many of whom haven't had such a good deal from the pension system, I am introducing a completely new flexible way for the next generation to save. It's called the Lifetime ISA. Young people can put money in, get a government bonus, and use it either to buy their first home or save for their retirement.

"From April next year, I am raising the tax-free personal allowance to 11,500 pounds.

ON SUGAR

"I can announce that we will introduce a new sugar levy on the soft drinks industry. It will be levied on the companies. It will be introduced in two years' time to give companies plenty of space to change their product mix.

"It will be assessed on the volume of the sugar-sweetened drinks they produce or import. There will be two bands - one for total sugar content above 5 grams per 100 millilitres; a second, higher band for the most sugary drinks with more than 8 grams per 100 millilitres." (Reporting by Sarah Young and Kate Holton)