Britain ‘will weather storm’ – Osborne

CHANCELLOR George Osborne today announced a raft of measures aimed at getting the UK economy out of neutral against a backdrop of increasingly gloomy forecasts.

In his Autumn Statement, Mr Osborne laid out plans for credit easing worth £21bn that will see the taxpayer underwriting lending to small businesses and the creation of an SME company bond market.

The Government also published its national infrastructure plan identifying 500 projects the Coalition wants to see built over the next 10 years. Mr Osborne committed the Government to an additional £5bn of spending on infrastructure and finding ways of encouragng up to £20bn of investment in public projects from pension funds.

He confirmed that the transpennine rail route will be electrified and car tolls on the Humber Bridge halved.

He have the go-ahead plans for a second enterprise zone on the Humber and said they and the one in the Sheffield City Region would benefit from 100% capital allowances.

The Chancellor revealed he was adding a further £1bn to the Regional Growth Fund on top of the £1.4bn that has already been allocated and investing £500m in hi-tech industries as well as financial help for energy intensive industries.

Mr Osborne was speaking after the Office for Budget Responsibility stopped short of forecasting double dip recession but cut its GDP growth forecasts for 2011 and 2012 to 0.9% and 0.7% respectively.

Labour said the OBR figures showed the Coalition’s economic plan was “hurting, but not working”.

Mr Osborne told the House of Commons that the Eurozone crisis was based on a lack of confidence in the ability of countries to deal with debt.

He said: “We will do whatever it take to protect Britain from this debt storm while doing all we can to build the foundations of future growth.”

Mr Osborne also had a stark warning that if the rest of Europe heads into recession “it may prove hard to avoid one in the UK”.

The business rate holiday for small businesses was extended to April 2013 and the Government will launch a new Seed Enterprise Investment Scheme in April, offering 50% income tax relief on investments.

The Government has committed to introducing an ‘above the line’ tax credit in 2013 to encourage research and development.

Cities will be asked to compete for a share of £100m earmarked for creating six “super-connected” cities boasting 100MB per second broadband.

In an effort to ease the pressure on consumer spending Mr Osborne confirmed he will cancel a planned rise in fuel duty in January and will keep the increase in regulated rail fare rises to 1% above RPI inflation.

There was also help for parents in the shape of an extension to the number of free childcare places for two-year-olds and new measures to encourage home buying.

Mr Osborne said the spending would be paid for through a mixture of new restrictions on public sector pay and announced a review that would investigate whether civil servants could be paid at different levels depending on where they work.

He also said that action would be taken to ensure that overseas aid did not exceed 0.7% of GDP.

Looking ahead to future Government spending, Mr Osborne said Whitehall would see budgets fall 0.9% in real terms in 2015/16 and 2016/17. A rise in the state pension to 67 was brought forward to 2026.

The Government restated its opposition to an EU transaction tax that could impact on the competitive position of the City of London.