Amidst a rowdy House of Commons, George Osborne has announced Budget 2013 which contains help for drivers, drinkers and homebuyers but it has more bad news for the state of economic recovery. The Chancellor’s budget was populist in nature aiming to ease the burden of the public, designed to ease the cost-of-living, including a 1p cut in the price of beer and the cancellation of a planned fuel duty hike.
A £130bn mortgage guarantee scheme will help people without big deposits buy homes, with interest-free loans worth 20% of the value of a new build property also available. George Osborne announced a £130bn mortgage guarantee scheme that is aimed at helping people who do not have big deposits to buy homes. The scheme will provide interest-free loans worth 20% of the value of a new build property also available. George Osborne also gave small businesses a boost by unveiling a new employment allowance which will save employers £2,000 on their National Insurance bills.
George Osborne admitted that the economic recovery was much slower than expected and was taking too long while he announced the growth forecasts for this year have been cut in half to just 0.6%. The independent Office for Budget Responsibility does expect Britain to avoid a triple-dip recession but public borrowing will be higher because of the floundering recovery. Public borrowing is now expected to hit £114bn this year instead of £108bn before eventually falling to £42bn in 2017/18. Reverberating the problems being faced by Britain, figures released hours before the Budget 2013 showed the first rise in unemployment for a year – up 7,000 to 2.52m.
The chancellor announced a further £2.5bn in Whitehall cuts over the next two years to fund capital spending projects. He confirmed plans to help working parents with tax-free childcare support and to introduce a flat rate pension by 2016. The Capital Gains Tax holiday will also be extended and corporation tax cut further by 1% to 20% in April 2015. Further cuts in the spending review for 2015/16, up from £10bn to £11.5bn, are expected. In the Budget 2013, George Osborne announced that the Bank of England’s remit was being overhauled but that it will keep its inflation target of 2%.