A Budget for ‘makers, doers and savers’ but more austerity on the way

CHANCELLOR George Osborne focused on economic gains and falling unemployment in his Budget but his key message was the need for more austerity.

The latest figures show the unemployment claimant count fell by 24% since last year, while the Office for Budget Responsibility has revised up its forecast for economic growth for this year from 1.8% to 2.7%, making the UK one of the fastest growing advanced economies.

But he said economic security was his “central mission”, and that required more cuts that will see the structural deficit fall from 6.6% this year to a small surplus in 2017-18. “The biggest risk is abandoning the economic plan that’s working,” he said. He is aiming for debt as a proportion of GDP of 74.2% by 2018-19.

The Chancellor said there would be more savings in the public sector and a cap on welfare, but he unveiled a package of measures designed to assist manufacturing growth, help exporters and let individuals “keep more of the money they’ve earned”. The personal allowance will rise to £10,000 this year, and £10,500 in 2015, and the threshold for the upper income tax limit will rise from £41,400 to £41,865 and then to £42,285.

There were also “far reaching reforms” for pensions and changes for savers with cash and share ISAs being merged into one pot that can hold £15,000, and good news for drinkers with a freeze on duty for spirits and a 1p cut on beer duty.

He opened by saying: “The economy is continuing to recover and is recovering faster than forecast. We set out our plans and together with the British people we held our nerve. The job is far from done. Our country still borrows too much. We still don’t invest, export or save enough, so today we do more to put that right.”

He added: “For many decades Britain has borrowed too much and saved too little so in this Budget we make sure hard working people keep more of what they earn and more of what they save. Faster growth alone will not balance the books. Securing Britain’s economic future means more hard decisions, more cuts and the question for the British people is who has the credibility to deliver them?”

The Chancellor concluded by saying it was a Budget for “makers, doers and savers”.

Headline business measures:

* £7bn package to cut energy bills for manufacturers and other businesses.

* Extension to enterprise zone benefits for a further three years.

* Double annual investment allowance to £500,000 and extend to the end of 2015.

* Corporation tax down from 23% to 21%, and then 20% next year.

* Extended grants for small businesses to take on an extra 100,000 apprentices, and also introduce degree level apprenticeships.

* Incentives for housebuilding with £500m finance for small housebuilders

* Extending Help to Buy for the rest of the decade.

* Changes to the export finance system – double amount available to £3bn and lower interest rates.

* Reform to Air Passenger Duty with all long haul flights carrying the same lower band as flights to the US.

* Action on tax evasion including more cash for the HMRC and new powers for it to collect from bank accounts

* Waive inheritance tax for emergency services staff who die while at work.