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Monday, April 20, 2009

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Mother Hubbard Budget



On Wednesday, Alistair Darling will present his first budget since Britain went into recession.

On the basis of what has already emerged from the Treasury, here are some of the announcements he is expected to make:

Public sector borrowing: Much worse than forecast in last autumn's pre-budget report.

Darling is expected to say that borrowing will hit around £160bn in 2009-2010, and even more - perhaps as much as £175bn - the following year.

Public spending: Darling has already said public spending will rise by less than originally planned over the coming years.

He is expected to announce further cuts, worth £10bn, in addition to cuts already announced, worth £5bn, to be achieved through "efficiency savings".

Growth: The chancellor is expected to say that the economy will contract by 3.5% this year – again, much worse than expected at the time of the pre-budget report.

But he will predict that the recession is likely to end at the end of 2009 and that the economy could grow by as much as 1% next year.

Bank bailout costs: According to the Financial Times, Darling will concede that the government will not recover all the money spent on bank bailouts and say that the cost to the taxpayer could be as high as £60bn.

Employment measures: Ministers are describing it as "a budget for jobs", and it will include £2bn for measures to help the unemployed.

Those aged under 25 who have been unemployed for a year will be guaranteed a job, work experience or training.

Green measures: Around £300m will be provided to pay for better home insulation, with around £200m for investment in wind farms and other renewable technologies.

Car scrappage scheme: Motorists are to be offered up to £2,000 if they trade in an old car for a new, more environmentally-friendly one.

Housing: The Treasury is to underwrite mortgage-backed securities worth £50bn in an attempt to encourage more lending to homebuyers.

Tax evasion: People owing the exchequer more than £25,000 are to be named and shamed.

North Sea oil: Tax incentives are intended to encourage oil companies to explore new fields.


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