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George Osborne chose International Happiness Day for his 2013 Budget and like most of his predecessors gave a forceful exposition of as much good news as he could find truthfully though happiness was fairly thin on the ground this year.
The background to the Budget was some pretty depressing economic forecasts from the Office of Budget Responsibility with growth for 2013 expected to be down to 0.6% reduced from an already disappointing 1.2% announced only 3 months ago in the Autumn Statement.
Borrowing is also expected to be up from previous forecasts to £114 billion this year as is debt as a share of GDP. Not surprisingly and perhaps not altogether unfairly, he placed much of the blame for this on the international financial situation. Clearly he can’t now expect export led growth to get us going again – or at least not from our major markets in the Eurozone.
The deficit has given him very little room for manoeuvre and this is a fiscally neutral Budget – so no net tax cuts. The Bank of England is tasked with being a little more imaginative with monetary policy under the incoming new Governor – but with the same basic target of 2% inflation. Nevertheless, the economy is expected to stay out of recession for 2013 with employment continuing to rise.
The Budget had fewer headline measures than in some years but the rise in Income Tax allowances to £10,000 by 2014 is dramatic as is the cut in the main rate of Corporation Tax to 20%. The freeze in fuel duty will also be welcome across the country as oil prices are rising again but, of course, this is particularly important in rural areas without much public transport.
….. and of course with the abolition of the Beer Duty escalator with an additional cut of 1p perhaps more of us will be able to raise a glass in gratitude.
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