Budget for an 'aspiration nation'
Published 20/03/2013 | 13:41
George Osborne has delivered what he termed a Budget for an "aspiration nation", against a backdrop of economic gloom as growth forecasts were slashed and official forecasters warned that deficit reduction had "stalled".
Eye-catching give-aways included a penny off the price of a pint of beer and the scrapping of September's planned 3p rise in fuel duty, but the Chancellor put his strongest emphasis on measures to encourage jobs, home-ownership and small businesses.
Labour leader Ed Miliband attacked Mr Osborne as a "downgraded Chancellor" offering "more of the same - higher borrowing, lower growth". But the Chancellor insisted the coalition Government's "tough decisions" had cut the deficit by a third and helped create 1.25 million new jobs in the private sector since the general election, while keeping interest rates at record lows.
He brought a planned increase in income tax thresholds to £10,000 forward to 2014, which Tory aides said meant that everyone who paid the 10p tax rate under Labour will next year be taken out of the tax altogether.
Public sector net borrowing forecasts were revised upwards in every year to 2017/18, adding a total of £55.7 billion to the amount the Chancellor is expecting to borrow over the next five years compared to his plans at the time of the December Autumn Statement. Debt will not fall as a share of national income until two years after Mr Osborne's original 2015 target and will peak at 85.6% of GDP (£1.58 trillion) in 2016/17, an increase of 6.4% on the previous forecast.
But, in better news for the Chancellor, the OBR predicted a small increase in GDP in the first quarter of this year, meaning that the UK will avoid an unprecedented triple-dip recession. Labour said that the figures meant that overall borrowing is expected to be £245 billion higher than planned over the course of the Parliament.
And the party said that OBR figures showed wages are set to fall by 2.4% in real terms between 2010-15, leaving a one-earner family with two children and a £20,000 income £381 a year worse off.
Mr Osborne acknowledged that recovery was "taking longer than anyone hoped" but rejected Labour calls for a change in the course of economic policy, telling MPs: "We must hold to the right track."
Polling carried out by consumer champions Which? immediately after the Budget found 89% of voters backed the rise in the personal tax allowance to £10,000 and 87% supported moves to scrap the fuel duty rise. According to the research, 66% of adults approved of the Shared Equity Scheme and 57% were in favour of moves to underpin new mortgage lending.
But the survey found a third of the public now feels less confident about the prospects for the economy over the coming year while 28% are less confident about their personal finances. The poll also shows 59% believe the Government should rethink its economic plan and 44% expect their personal finances to worsen in the next 12 months.