Chancellor George Osborne unveiled his fifth Budget amidst signs of growing levels of confidence in the UK’s economic condition. Keen to drive home the message that the economy is recovering ‘faster than forecast’, the Chancellor announced that the Office for Budget Responsibility had revised its economic growth forecast upwards from 2.4% to 2.7% for 2014.
However, warning that ‘the job is far from done’, the Chancellor announced that further austerity measures would be necessary to tackle ongoing high levels of borrowing and help secure economic ‘resilience’, and confirmed that 2015 will see the introduction of a five-year structural welfare cap, starting at £119bn.
Central to the speech were business investment, productivity and exports, with another temporary increase in the Annual Investment Allowance to £500,000, coupled with a doubling of export lending to £3bn. British manufacturers will benefit from a £7bn package aimed at reducing spiralling energy costs.
The Chancellor also revealed some significant personal tax measures, with sweeping changes to the taxation of pensions, including granting pensioners the freedom to control their own pension pots. Individual taxpayers are set to benefit from a further increase in the basic income tax personal allowance, which will rise to £10,500 with effect from 2015.
Turning his attention to the plight of UK savers, the Chancellor announced the reduction to zero of the 10p starting rate for savings and outlined a dramatic reform of Individual Savings Accounts (ISAs), through a New ISA (NISA) which will combine the cash and stocks and shares element of the existing ISA.
Confirming that the fuel duty rise for September will not go ahead, the Chancellor went on to announce a freeze in duty on whisky, other spirits and ordinary cider, and a reduction of beer duty by a penny a pint.
Other measures confirmed by the Chancellor include changes to the Tax-Free Childcare scheme worth up to £2,000 for working families, an increase in the National Minimum Wage, an extension of the Help to Buy scheme, and the creation of a new garden city at Ebbsfleet in Kent.
Finally, the Chancellor outlined plans to scrap the £1 coin in favour of a new twelve-sided coin, which will mirror the shape of the historic ‘thrupenny bit’ while embracing the latest in anti-counterfeiting technology.
For a detailed overview of the Budget Report and what it means for you and your business, visit our Report summary.
WHAT THEY SAID
This is a Budget for building a resilient economy. If you’re a maker, a doer or a saver: this Budget is for you.
Chancellor George Osborne
You can change the shape of the pound but it doesn’t matter if the pound is square, round or oval – if you’re £1,600 worse off, you’re still £1,600 a year worse off.
Labour leader Ed Miliband
The Budget will put the wind in the sails of business investment, especially for manufacturers. This was a make or break Budget coming at a critical time in the recovery and the Chancellor has focused his firepower on areas that have the potential to lock in growth.
John Cridland, Confederation of British Industry
The Chancellor is right to recognise that while the economy is recovering well, and many economists now predict future growth will be higher than official forecasts, much remains to be done to repair government finances.
James Sproule, Institute of Directors
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