As Chancellor Alistair Darling stands up to deliver his second Budget statement to the House of Commons, we have already learned this morning that the recession pushed government borrowing to £90 billion in the last financial year (PDF format, 99.6kb), higher than the £78 billion estimate in the 2008 Pre-Budget Report. While the rise in unemployment also revealed this morning was lower than expected, the labour market situation nevertheless provides a stark backdrop to what has been widely tipped as a "Budget for jobs".
The Chancellor expects the economy to start growing again towards end of 2009. Growth forecasts:
- -3.5% for 2009
- 1.25% in 2010
- 3.5% from 2011
- Around 2. 75% trend rate of growth "in future years"
Inflation forecasts:
- CPI expected to continue to fall sharply, reaching 1% by end of 2009.
- RPI expected to fall to -3% by September 2009, before moving back above zero next year
- Inflation target remains at 2%.
Jobs and training:
- £1.7 billion funding (in addition to the £1.3bn in the pre-Budget) for Jobcentre Plus and the New Deal plus additional support through the flexible new deal.
- From January anyone under 25 who has been unemployed for 12 months will be offered a job or training place.
- Extra investment (£250m this year) for further education places.
Public finances:
- Public borrowing will be £175bn this year (12.4% of GDP) and 173bn in 2010/11, then £140bn, £118bn, £97bn for next few years.
- Government will make additional efficiency savings of £9 million by 2013/14 (on top of £26.5 government says have already been made since 2004).
- Current spending growth will be 0.7% a year from 2011/12 onwards.
Support for businesses include:
- a doubling of the main capital investment allowance to 40% from 2009/10.
- £500 million support for the building industry to help them borrow to build new homes.
- Help for companies to reclaim tax on profits extended until November 2010.
- New top-up credit insurance scheme.
- "scrappage" scheme to help automotive sector.
Taxes and benefits:
- A 50% income tax rate will come in from April 2010 for those earning £150,000 (up from the 45% rate proposed in Pre-Budget and one year earlier than proposed).
- Personal allowances for those earning over £100,000 removed from April 2010 (proposal had been to restrict).
- Redundancy pay to increase from £350 to £380 a week.
- Child element of tax credit to increase by £20 a week from April 2010.
- Granparents of working age who care for grandchildren will see that work count towards their entitlement to the basic state pension.
- Tax relief on pensions to be cut for those earning more than £150k a year.
- Basic state pension will be increased by at least 2.5% regardless of RPI level.
- Savings limit for pension credit will increase to £10,000 from November 2009.
Other proposals
- Stamp duty holiday on properties sold for less than £175k extended to end of 2009.
- Fuel duty up by 2p in September 2009
- Alcohol and tobacco duties up 2% from midnight
- Treasury to publish proposals on reform of financial regulation.
- Various proposals on climiate change including £450m of investment in green technology.
- Total annual limit on ISA savings increased to £10,200 from this year for over-50s and next year for everyone else.
| Tweet |
|
| Permalink | Email this |
