Everything you need to know about the UK Budget
- 23 March 2012
Chancellors use the Budget statement to update Parliament and the nation on the state of the economy, on the public finances and on progress against the Government's economic objectives.
George Osborne's budget options were limited because of the government's commitment to cut the country's annual deficits and warnings from two credit rating agencies that Britain could lose its triple A credit rating within the next 12-18 months.
SUMMARY OF KEY BUDGET ANNOUNCEMENTS
The Chancellor's opening salvo: "Mr Deputy Speaker, this Budget rewards work. Britain is going to earn its way in the world. There is no other road to recovery. This Budget supports working families and helps those looking for work. "It unashamedly backs business."
Budget 2012 announced wide-ranging reforms to the tax system. These reforms will lower headline rates, diversify and broaden sources of revenue, and reduce reliefs. The reforms were based on the principle that the tax system should be fair, efficient and simple.
KEY POINTS BY SECTOR
- The Office of Budget Responsibility (OBR) expects UK to avoid recession and revised the growth forecast for 2012 from 0.7% from 0.8%
- Unemployment expected to peak at 8.7% this year.
- Top rate to be reduced from 50p to 45p from April 2013.
- Personal tax allowance – the threshold at which workers start paying income tax – will rise to £9,205 in April 2013, up £1,100 from £8,105 n April 2012.
- Headline rate of corporation tax to be cut further from next month by one percentage point – to 24%. Future cuts to go ahead as planned.
- Government Wants to double UK exports to £1 trillion this decade.
- Plans to save £5bn by freezing age-related allowances for half Britain's pensioners
- Single-tier state pension to be introduced – estimated to be £140.
- Borrowing forecast to fall from £126 billion this year – £11 billion less than forecast in Autumn Statement – to £21 billion by 2016/17
- OBR says government is on course to eliminate structural current deficit by 2016/17
- The government will invest £130 million in the Northern Hub rail scheme.
- Fair fuel stabiliser means above-inflation rises in fuel duty will return only if price of oil falls below £45 a barrel.
Not surprisingly, the cut in the top rate of tax for high earners sparked heavy protests from the public. The Chancellor's announcement that he will phase out the higher income tax allowance enjoyed by around half the country's pensioners also brought outrage. Here's some of the fallout from the budget:
- Child benefit cut will 'put parents off work'
- Budget will make the vulnerable pay
- A slap in the face for decent people
- Corporation tax cut a relief for SMEs
- UK budget's hit on pensioners provokes ire
- IFS warns Budget is based on optimistic assumptions
- Author of The Economist's Bagehot column says the cut in the corporation tax was a pitch for footloose multinational investors to choose Britain.
- The chancellor's budget also confirmed that he's sticking to 'Plan A' i.e. long-term deficit reduction.
- By cutting the top rate of income tax for the wealthiest, George Osborne made a ‘rookie error' and played directly into the narrative that his opponents are using, writes Ian Dunt.
- The Wall Street Journal was more positive on the tax cut, however, concluding that: "The simplest way to motivate investors and entrepreneurs is to let them keep more of their money when they succeed."
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