George Osbourne’s Autumn Statement declared that the Government’s economic strategy is designed ‘to reduce the deficit, restore stability, equip the UK to succeed in the global race and rebalance the economy.’
The Autumn Statement admitted that over the past three years the recovery has been slower than forecast, maintaining that this was down to the impact of the financial crisis on GDP being greater than expected, the sovereign debt crisis in Europe, and the way in which commodity price driven inflation has reduced real incomes and raised budget costs.
Despite this, he attempted to claim a number of successes for his Government’s fiscal policy – assertions that were met with a chorus of jeers and groans from across the House.
He argued that the government’s policies have reduced the deficit by a quarter, created 1.2 million private sector jobs since the first quarter of 2010; and caused market interest rates to fall to near record lows.
But critics fiercely refute the Government’s belief that the economy is healing; they maintain that the statement represents an attack on the welfare system and demonises the most vulnerable sectors of British society.
More specifically, the Chancellor announced that there would be no net tax rises. Along with this, the Office for Budget Responsibility updated the forecasts for growth (1.2% for 2013, rising to 2.8% by 2017) and borrowing (to fall from £108bn in 2012/13 to £31bn in 2017/18).
Here are some of the highlights:
- Cancellation of the previously proposed fuel duty increases.
- Increase in the Annual Investment Allowance to £250,000 for 2 years from January 2013.
- The main Corporation Tax rate is to be cut to 21% from April 2014.
- Further increase of £235 in the personal tax payers allowance for 2013/14.
- A reduction in the annual allowance for pension contributions from £50,000 to £40,000 from 2014/15.
- The creation of a new £1 billion Business Bank.
- An increase in the Bank levy is forecast to raise £515m for 2013/14.
View the Autumn Statement in full
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