Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Budget 2008: Darling fails to inspire

by
12th Mar 2008
Save content
Have you found this content useful? Use the button above to save it to your profile.

Chancellor Alistair Darling’s first budget failed to inspire as he reported increased public borrowing and falling growth rates.

On inflation, the chancellor reaffirmed a target of 2% based on the consumer price index, but hit the usual victims of increased taxation, booze, cigarettes and petrol-guzzling cars.

He also announced an additional £7bn of borrowing in the coming tax year over the Government's October estimates, up from £36bn to £43bn. The news does not get better in the subsequent year, with public sector net borrowing rising another £7bn to £38 billion the year after.

The chancellor pointed the finger squarely at the credit crisis spurring a global economic slowdown. "This poses a major risk to the world economy," he said, but he argued that the UK was in a better position to weather the economic slowdown than most nations. In spite of this he cut his forecasts for economic growth from 3% in 2007 to 1.75 to 2.25% in 2008. He hoped the 3% growth figure would return by 2010.

"Blaming the credit crisis, which he referred to on 14 occasions during his speech, the chancellor downgraded his growth forecast but stuck to the view that 2008 will be the bottom, with growth picking up from 2009," said Andrew Smith, chief economist at KPMG. "But," he added, "If the chancellor is right, this is hardly the stuff of crises."

Mr Darling estimated debt as a share GDP in 2007-08 at 37.1% of GDP. However Conservative leader David Cameron dismissed the Budget and argued that taking into account the rescue of Northern Rock with public finances, debt as a share of GDP was in fact 43.8%, well the 40% ceiling set out in the government's sustainable investment rule.

There was mixed news for companies. As announced in the major package of reforms to the business tax system in last year's Budget, the main rate in corporation tax will be reduced from 30% to 28%. However smaller companies are facing an increase from 19 to 22% by 2009.

Budget 2008 coverage sponsored by

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.