autumn statement austerity to outweigh growth 2018

Chancellor George Osborne will miss his target to reduce the UK's national debt and has been forced to extend his austerity measures into at least 2018.

autumn statement austerity to outweigh growth 2018


At the same time as the Chancellor of the Exchequer was speaking to Parliament, the Office for Budget Responsibility published its forecast for UK GDP to fall by 0.1% this year. The OBR added that it expects the UK’s economy to grow by 1.2% next year and then rise gradually to 2.8% in 2017.

According to HM Treasury: “Because of the ongoing impact of the financial crisis, the euro area crisis and the effect of inflation on incomes and business costs, the OBR is predicting a more subdued and uneven recovery than expected with growth weaker and inflation higher than forecast.”

To promote growth, Osborne announced a number of plans including:

* an immediate £5.5bn earmarked for infrastructure projects including long-term private investment in roads, science investment, free schools and academies  investment, with a further £40bn to come;

* a cut in corporation tax from April 2014 to 21%, from 22%, to encourage companies to either move to or remain headquartered in the UK. This compares with rates of 40% in the US, 33% in France and Germany’s 29%;

* from 1 January next year, small and medium-sized businesses are to benefit from an increased Additional Investment Allowance for two years, up from £25,000 to £250,000, for qualifying investment in plant and machinery;

* they will also benefit from a Business Bank with £1bn for small businesses to access finance, while UK Export Finance will provide a further £1.5bn in loans to fund small firms’ exports.

These, and other plans, are all designed to meet Osborne’s now revised target of getting debt as a proportion of GDP falling by 2015/16, just in time for the next General Election.



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