Hong Kong's leadership Wednesday blamed months of pro-democracy protests as the economy fell well short of predicted growth in 2014, and said "prolonged political bickering" could do more damage to investor confidence.
The growth rate was just 2.3 percent in 2014, down from 2.9 percent the previous year and far slower than the three to four percent predicted in last year's budget speech.
Delivering his budget for 2015-16, finance secretary John Tsang said local industries had been damaged by the protests which began in late September last year and brought parts of the city to a standstill.
"Prolonged political bickering is detrimental to public administration and the international image of Hong Kong as a stable, law-abiding and efficient city," he said.
"It may even dampen investors' confidence in Hong Kong. Such self-inflicted harm does not serve the city well."
Tsang announced one-off measures to support sectors he said had been hit by the protests.
"The Occupy movement affected tourism, hotel, catering, retail and transport industries," he said, with relief measures including the waiving of licence fees for restaurants, hotels and travel agents as well as waiving administrative fees for taxis and buses.
Tsang predicted "even more vehement" disputes in the semi-autonomous Chinese city as it grapples with how its next leader should be chosen.
Beijing has promised that the public will for the first time be able to vote for the next chief executive in 2017. But it says candidates must be vetted by a loyalist committee.
That decision sparked 79 days of street blockades in some areas by pro-democracy protesters.
- 'Challenging' 2015 -
The economy's disappointing growth was also due to the weak eurozone and Japan's recession, said Tsang, adding that it was the third consecutive year that growth had fallen short of the annual average of 3.9 percent expansion over the past decade.
The year ahead would be "challenging" with predicted growth of one to three percent as expected US interest rate rises, volatile oil prices and uncertainties in Europe play a part.
He announced a raft of measures to boost public spending after slashing it last year, as the government comes under increasing pressure over social inequality -- frustrations which also fuelled last year's mass rallies.
Measures include reductions to salaries tax and rent support for low-income families in public housing.
However, there would still be a budget surplus of HK$63.8 billion ($8.2 billion) for the 2014-2015 period, Tsang said.
Dozens of protesters outside the legislative council building questioned the government's spending choices before the budget speech.
"Why is it so many people cannot afford a house or that they have to pay such high rents?" asked Ramon Yuen, an accountant.
"It's because the government reacts too slowly... they are too conservative.
"The government should cut down on the surplus and spend more."
"Many grassroots people are still under financial pressure in their daily lives," district councillor Ronald Yeung told AFP.
"They should spend and invest a lot more to help these people."
Veteran pro-democracy legislator Leung Kwok-hung, known as "Long Hair" was bundled out of the chamber by security guards after shouting for a universal pension scheme.
Tsang said HK$50 billion would be earmarked for "retirement protection" for the elderly, but gave no further details.
Tsang ended by paying tribute to his "old friend" Kevin Lau, the former editor of liberal newspaper Ming Pao, who was severely injured after being attacked with a cleaver in the street in broad daylight as last year's budget speech was delivered.
"This unthinkable violence is my abiding memory of the last budget," Tsang said.
"I am glad to see him returning to work and a normal life after a year of treatment and rehabilitation."