Darling Delivers Pre Budget Report Aimed At Ending UK Economic Woes.

 

 

In his Pre-Budget Report delivered in the House of Commons yesterday Chancellor Alistair Darling gave a gloomy assessment of the UK’s economic fortunes, cutting growth forecasts from 2.75% to between -0.75% and -1.25% for the coming year.

In response he unveiled a plan to inject £20 billion, around 1% of GDP, into the economy and to make £5 billion in efficiency savings.

The most trailed aspect of the financial stimulus package was a 2.5% cut in VAT, taking it from 17.5% down to 15% aimed at luring consumers back to the high street in the all important run up to Christmas.

Pensioners will receive a one off payment of between £60 and £120 in January in addition to their £10 Christmas bonus.

Government borrowing is set to rise to £78 billion this year and will reach £118 billion in 2009.

To pay for his largesse the Chancellor announced an increase in the tax rate for people earning £100, 00 or above to 45% and a 0.5% increase in National Insurance payments for all workers, both of which will come into force from April 2011.

Duty on tobacco, beer and spirits will also rise to help pay for the cuts in VAT.

Mr Darling told the House he was taking ‘exceptional measures’, to prevent the <?xml:namespace prefix = st1 />UK from experiencing a ‘deeper and longer recession that would cost the country more in the long term.’

The package would, he said ‘ensure there is extra money flowing into the economy when it is needed most.’

Shadow Chancellor attacked the government’s plans saying they had created ‘a huge unexploded tax bombshell timed to go off at the time of the next economic recovery’ and that Mr Darling had ‘offered temporary tax giveaways paid for by a lifetime of tax rises on the British people.’

Commenting on the report Liberal Democrat Treasury Spokesman Vince Cable said VAT cuts would not do enough to boost the economy saying ‘it would be much more sensible to put money in the pockets of low paid workers by cutting their income tax.’

http://news.bbc.co.uk/1/hi/uk_politics/7745340.stm

Following pressure from the Conservative Party House of Commons Speaker Michael Martin has ruled that a three hour debate will take place today on the 'crisis' Pre-Budget Report delivered by Chancellor Alistair Darling on Monday. This is a break with parliamentary precedent under which only the full Budget, due to be delivered in March next year, is usually debated by the House.

A motion has also been tabled by the Liberal Democrats calling for the cut in VAT to be dropped in favour of cuts to income tax for low paid workers, it is not thought likely that the motion will gain sufficient support to be put to the vote. http://news.bbc.co.uk/1/hi/uk_politics/7747197.stm