Growth forecast slashed in half

Chancellor of the Exchequer George Osborne outside 11 Downing Street before heading to the House of Commons to deliver his annual Budget statement.
Chancellor of the Exchequer George Osborne outside 11 Downing Street before heading to the House of Commons to deliver his annual Budget statement.
3
Have your say

The Chancellor slashed the official growth forecast in half as he admitted the recovery was taking “longer than anyone hoped”.

The Chancellor cut the price of beer and had good news for taxpayers as he delivered his 2013 Budget.

But he also painted a gloomy picture for the economy, as the official growth forecast was slashed in half and George Osborne admitted the recovery was taking “longer than anyone hoped”.

He confirmed September’s planned fuel duty rise has been scrapped.

He said a planned 3p rise in beer duty tax was being scrapped, and replaced by a 1p cut on a pint of beer.

And he brought forward a rise in the personal allowance to 2014, meaning no income tax is paid by anyone on the first £10,000 of their earnings.

He also announced a new employment allowance which will take the first £2,000 off employer National Insurance bills for every company in the country – a move he described as “taking tax off jobs”.

Labour leader Ed Miliband condemned the Mr Osborne’s Budget, saying: “All he offers is more of the same - higher borrowing and lower growth.

“A more of the same Budget from a downgraded Chancellor. He is the wrong man in the wrong place at the worst possible time.”

But the Chancellor insisted today’s package was a “Budget for people who aspire to work hard and get on”.

He added: “Today, I’m going to level with people about the difficult economic circumstances we still face and the hard decisions required to deal with them.”

Mr Osborne delivered his Budget to a rowdy House of Commons in which the deputy speaker – Chorley Mp Lindsay Hoyle – was forced to intervene repeatedly and some MPs apparently clutched the front page of London’s Evening Standard, which had been supplied with full details of the Budget in advance.

Mr Osborne said the economy would grow by just 0.6 per cent this year – down from the previous forecast of 1.2 per cent – and would be slower than forecast next year at 1.8 per cent compared to the 2% per cent forecast at the time of the Autumn Statement.

The sluggish growth figures mean borrowing will be higher than expected – hitting £114 billion this year compared to a previous forecast of £108 billion.

Next year borrowing will be £108 billion as against the £99 billion previously predicted, before dropping down to £42 billion in 2017-18 compared to £31 billion forecast in the Autumn Statement.

But the Chancellor said the deficit would continue to come down, thanks to “many tough decisions” taken by the Government.

He confirmed that Whitehall budgets would be cut by 1 per cent after a £11 billion underspend this year, with protection for schools and health. Money saved will be pumped into infrastructure projects, he said.

And he said the public sector pay cap of 1% would be extended by one year in 2015/16. But military personnel would receive their full recommended increase in May.

On energy, the Chancellor announced a boost for the controversial shale gas industry, which collects gas using a process known as fracking. Mr Osborne said the “generous new tax regime” would include a shale gas field allowance. He said: “Shale gas is part of the future. And we will make it happen.”

Declaring “Britain is open for business”, the Chancellor announced a series of measures designed to boost commerce, including a 1 per cent cut in corporation tax to 20 per cent in April 2015. And he confirmed more measures aimed at curbing tax dodging, claiming it was “one of the largest ever packages of tax avoidance and evasion measures presented at a Budget”.

Tony Medcalf, head of tax at Preston-based accountants Moore and Smalley, said: “Clearly this was a Budget for enterprise with a lot of incentives for those either in work or creating work by setting up new businesses. It was intended to boost growth within the economy and reinstate the work ethic of the British people.”