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Budget 2009: Summary of key measures

22nd Apr 2009
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  • The UK economy is forecasted to shrink by 3.5% in 2009. The growth forecast for 2010 is 1.25%, and from 2011 onwards it’s 3.5% a year.
  • Inflation will reach 1% by the end of the year. The retail price index will drop by -3.5%.
  • Public sector net borrowing is expected to hit £175bn this year (12.4% of GDP), and then £173bn, £140bn, £118bn and £97bn in the years that follow.
  • UK net debt stands at 59%, rising to 68% next year and increasing again to 79% by 2013/14
  • Income tax will not go up this year for most, however those earning more than £150,000 will see an increase from 45% to 50% from April 2010.
  • Fuel duty will be upped by 2% from September, and 1% above indexation every year for the next four years.
  • Alcohol and tobacco duties will be increased by 2% from 6pm today.
  • Stamp duty holiday on homes under £175,000 will be extended until end of 2009.
  • A new car scrapping scheme will offer a £2,000 discount on new cars when vehicles over ten years old are traded in.
  • The child element of the Child Tax Credit will increase by £20 from April next year.
  • Parents will receive £100 extra in child trust fund vouchers for new babies, taking them to £350.
  • State redundancy pay is to rise from £350 to £380 a week.
  • Grandparents’ care for young relatives will count towards basic state pension.
  • Last year's increase in winter fuel allowance to be extended for another year.
  • Annual ISA limit to be increased from £7,200 to £10,200, half of which can be invested in cash. From this year for over-50s, from next year for others.
  • Loss-making companies can reclaim tax paid on profits made in past three years.
  • Additional £1.7bn funding for jobseekers.
  • From January 2010 everyone aged under 25 unemployed for a year to get offer of job placement or training.
  • £260m new money for training and subsidies.
  • £250m extra this year to enable 16- to 17-year-olds to stay in education. £400m in next two years.
  • Pension tax relief restricted for those on incomes over £150,000 from April 2011. It will be gradually tapered to the same 20% rate received by most people.
  • £500m extra support for housing industry.
  • £100m for local authorities to build energy-efficient housing.
  • £50m to accelerate modernisation of housing for military families.
  • Main capital allowance rate doubled to 40% to encourage firms to bring forward investment.
  • £750m investment fund to provide financial support to emerging technologies.
  • Carbon budget commits UK to reduce emissions by 34% by 2020.
  • £435m extra support for energy efficiency measures for homes, businesses and public places.
  • £525m new support for offshore wind power projects. Will provide enough electricity for 3.5m households.
  • £405m new funding for low-carbon technology projects.
  • Most energy-efficient new power stations using combined heat and power to be exempt from climate change levy.

Replies (5)

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By User deleted
24th Apr 2009 15:16

debt as % of GDP
Your stats are of course only right if Ali's predictions about GDP (and in particular growth by 2010) are correct. Otherwise it's much much wose. We are widely reckoned to top out (hopefully) at £1 trillion of debt. Any forecasts made by HMT and HMG assume that we will quite quickly return to 2007/08 (pre "downturn") levels of activity which I must say is at best a silly assumption, and at worst criminal mismanagement.

Ken Clarke quoted the interest payments (on the Andrew Marr BBC 1 Sunday monring) at the same amount as we spend on education. And that's with "university placxes for all" policies.

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By User deleted
24th Apr 2009 09:57

Is it just me?
UK net debt stands at 59%, rising to 68% next year and increasing again to 79% by 2013/14...

We will be in hock for up to 80% of what we produce?
That is plainly just stupid, isn't it?

Are we actually going to be able to afford to pay the interest back on the debt...

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
23rd Apr 2009 13:09

IMF and bailouts
I have just been listening to a very highly respected economist talk about the current economic scenario.

One thing that REALLY scared me was this : if we go to the IMF we would need about $500 bn (dollars not pounds) but the IMF only has lending capability (for the whole world in total) of around $200 - $300 billion. AND we would never meet the lending criteria.

And I thought tax was scary!

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By lawmaniz
23rd Apr 2009 11:32

A Fairy Story (But more Alice in Wonderland)
... with the emphasis on 'wonder.' I still forecast a complete economic collapse of the UK economic sometime during 2009 that will result in a bail-out (with austerity conditions attached) by the IMF.

The UK is going to be forced, by hard economic circumstances, to drop its pretence at running a pseudo empire with a world-wide military presence and all the other trappings of a supposed world power. The UK is improverish, bankrupt, down and out - full-stop. Yes, hard words for hard time; but someone, somewhere, needs to spell it out.

Brown's boom has turned into Brown's bust. This Budget is crafted to hold onto as many Labour Parliamentary seats as possible when the electoral cull devastates New Labour next Spring or early summer 2010. We won't see a Labour government again for twenty plus years - so save any newspaper cuttings which mention this present government, they'll be collectors' items!

The wealth of a country comes from the enterprise and energy of its people, not by borrowing money on the international money markets or by juggling the tax system (or by getting one group of taxpayers to pay for the jobs and benefits of another group).

The UK is a small country with a relatively small population and small economy in comparison with big countries with big populations and big economies - the UK has had its day and needs to live within its (impoverished and much reduced) means.

It should wake up to the fact that its workforce must get off its collective backside and work hard for a living instead of living off the sweat and money of those in other countries. Does anyone else agree with this?

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By lizzyk
23rd Apr 2009 00:51

This is a Fairy Story (A Grimm one)
I was reading through the main point of the Budget and I was suddenly transported into an unreal world, there is just no way those growth figures are ever going to happen from 2010 on as the Chancellor states. Is he trying to kid us or just fool himself?

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