UK Budget: Osbourne Targets ‘Squeezed Middle’

By: EW News Desk Team   Date: 29 March 2011

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EW News Desk Team

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EconomyWatch, News Desk Team

 

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29 March 2011

Chancellor George Osborne is targeting Britain’s “squeezed middle” to support his budget which aims to tighten the Treasury’s grip over public spending. What can 25 million tax payers expect? Well, income personal tax allowance is expected to be increased by £600 next year, fund a £250m shared equity scheme for new homes and inflation increases in petrol duty.

The tax giveaways are however expected to be balanced with new tax-raising measures, stricter controls on tax evasion, as well as measures to curb overspending in Whitehall departments. A range of measures will also be outlined to include a “shake-up of planning laws, deregulation of employment laws affecting small businesses, and the long-awaited plans for a green investment bank as the coalition government seeks to shift the focus of the economy from deficit reduction to boosting growth.” According to the Guardian.

UK’s growth prospects for 2010 have worsened since last autumn with GDP increase forecast for 2011 lowered to 1.8 percent from 2.1 percent. However the chancellor is determined not to let the government’s deficit reduction plans go astray – with new measures designed to increase pressure on ministers to rein in spending, and face penalties if they fail to manage their budgets.

UK Budget at a Glace:

• Public borrowing for 2011 to come in £10bn below the £148bn forecast despite news the deficit in February topped £10bn

• Government spending pushed up due to consumer price index inflation from 4 percent to 4.4 percent last month. Also due to increasing food, fuel and import prices. The retail prices index rose from 5.1 percent to 5.5 percent last month.

• Income tax personal allowance due to go up to £7,475 next month, will be raised by more than inflation from next year. The £600 increase comes on top of the £1,000 rise next month is worth an average of £45 a year for taxpayers earning up to £115,000 a year.

• 550,000 taxpayers who earn more than £115,000 will lose £45 a year because they no longer have a personal allowance.

• Joint scheme with the construction industry to encourage and boost potential first-time home buyers: First-time buyers with a household income of less than £60,000 a year who can put down a 5 percent deposit on a new home will be eligible for a five-year interest free equity loan worth up to 20 percent of the value of the property. 

• Green investment bank with access to up to £3bn of funds from 2015 to invest in green infrastructure, including offshore wind farms.

Read the full report on the Guardian.


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