Chancellor of the Exchequer George Osborne has cut the UK governments economic growth forecasts and revealed that the nation’s budget deficit will take longer to get under control then he originally predicted.
The independent, Office for Budget Responsibility shows that the UK economy will shrink by up to 0.1% for 2012 instead of the predicted 0.8% in March and believes that the economy will expand by up to 1.2% next year instead of the estimated 2%. Osborne went on to say that debt as a percentage of GDP won’t begin to fall until 2016 at the earliest.
“While our deficit is forecast to go on falling, instead of taking three years to get our debt falling, it’s going to take four,” Osborne said. “Some say we should abandon our deficit plan, and try to borrow more. They think by borrowing more, they can borrow less. That would risk higher interest rates, more debt interest payments and a complete loss of Britain’s fiscal credibility.”
Osborne also revealed his plans to boost the economy. He announced new measures to tax the highest earners, reducing annual tax-free allowance on pension contributions of £10,000 to £40,000, he also announced new plans to improve the nation’s infrastructure including new road building projects and plans to introduce high speed internet to many different cities.
The key points were:
Fuel: a 3p-a-litre increase in fuel duty, planned for next January, is cancelled
Economic growth: Predicted to be -0.1% in 2012. Forecasts for 2013 is 1.2%, 2014 is 2. %, 2015 is 2.3%, 2016 is 2.7% and 2018 is 2.8%.
Taxes: Income tax threshold increased next year to £9,440, Threshold for 40% rate of income tax to rise by 1% in 2014 and 2015, from £41,450 to £41,865 and then £42,285, Main rate of corporation tax to be cut by extra 1% to 21% from April 2014.
Unemployment: Number of people out of work is expected to peak at 8.3% lower than the previous prediction of 8.7%.
“Yes, the deficit is still far too high for comfort,” Osborne said. “We cannot relax our efforts to make our economy safe. But Britain is heading in the right direction.”
The Pound to Euro exchange rate is currently trading at 1.2316
The Pound to US Dollar exchange rate is currently trading at 1.6098
The Pound to Australian Dollar exchange rate is currently trading at 1.5384
The Euro to US Dollar exchange rate is currently trading at 1.3071
The Euro to Pound exchange rate is currently trading at 0.8118
Comments are closed.