43 Budget View Economy
• Independent Office for Budget Responsibility (OBR) says UK will avoid technical recession with positive growth in first quarter of 2012
• OBR revises up UK growth forecast for 2012 to 0.8% - from 0.7% previously
• Forecast for 2013 from OBR is cut to 2% from 2.1% but forecasts growth of 2.7% in 2014, 3% in 2015 and again in 2016
• OBR Eurozone growth forecast for this year revised down by 0.8% to -0.3% and world economic growth also revised down over the next two years - by 0.2% and 0.3% respectively
• UK inflation is forecast to fall from 2.8% this year to 1.9% next year
• OBR forecasts unemployment to peak this year at 8.7% before falling each year to 6.3% by 2016-17
• OBR expects 1million more jobs to be created in the economy over the next five years
• But OBR has revised down the estimate of the claimant count, expecting it to peak at 1.67m this year rather than the 1.8m forecast in November
• Borrowing this year to be £126bn - £1bn less than forecast in the autumn. Forecast to fall to £21bn by 2016-17
• Consultation to be held on offering gilts - government bonds - with maturity terms of more than 50 years
Taxation
• From April 2013, the 50p top rate of tax will be cut to 45p. Chancellor states the hike to 50p “raised just a third of the £3bn we were told it would raise”
• Personal income tax allowance is to be raised to £9,205, up £1,100 from £8,105, from April 2013, making 24 million people £220 a year better off
• New general anti-tax avoidance rule to be introduced • Age-related allowances for pensioners to be simplified over time, starting in April 2013, creating a single personal allowance for all but ensuring no pensioner loses in cash terms
• New cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year, but no significant change to pensions relief
• The government announced a plan to give taxpayers statements showing where their tax goes, such as on healthcare and on interest payments on the national debt
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