Chancellor of the Exchequer George Osborne today (19 March 2014) delivered his Budget detailing changes he is planning on making to improve the UK’s economy.
The Chancellor said: “I have never shied away from telling the British people about the difficult decisions we face. And just because things are getting better, I don’t intend to do so today. Yes, the deficit is down by a third. Now in the coming year it will be down by a half. But it is still one of the highest in the world – so today we take further action to bring it down. Yes, investment and exports are up. But Britain’s got twenty years of catching up to do – so today we back businesses who invest and export. Yes, manufacturing is growing again, and jobs are being created across the country. So today we support manufacturers and back all regions of our country.”
The Chancellor announced economic forecasts in the Budget speech, in which he said the economy was, “continuing to recover and recovering faster than forecast”.
Official forecasts for UK economic growth have been raised for the next two years, yet cut for later years.
The predictions from the Office for Budget Responsibility (OBR) show that GDP is expected to rise by 2.7% in 2014 which is up from a forecast of 2.4% in December.
The growth forecast for 2015 has been raised from 2.2% to 2.3% and 2016 has been left unchanged standing at 2.6%. The 2017 rate fell from 2.7% to 2.6% and the 2018 rate fell from 2.7% to 2.5%.
The OBR also warned of possible risks that could threaten its growth forecasts, in particular, it said that escalation of the situation in Ukraine could risk lower growth.
This year’s Budget announces the Government will help British business by:
- Offering the best export finance in Europe
- Doubling the annual investment allowance to £500,000 until the end of 2015
- Reducing energy costs, to ensure that the UK remains a competitive location for manufacturing.
The Chancellor announced that by April 2015, the UK’s corporation tax will be 20% which will be the lowest in the G7 and joint lowest in the G20.
The Chancellor also wants to help British businesses go further and reach fast-growing emerging markets in Africa, China and India.
To tackle this, UK Export Finance is doubling its lending scheme to £3 billion and will be cutting lending rates by a third, which is the lowest level permitted by international agreements.
The Annual Investment Allowance will also be doubled from April 2014 to December 2015.
In terms of manufacturing, the Chancellor stated that the sector is vital to the UK’s economic recovery and the cost of energy has had a big impact on manufacturers.
To reduce these business energy costs, the Chancellor announced new support worth up to £6 billion. This will save an energy intensive business up to £6.25 million in 2018-19.
George Osborne also said he would freeze the carbon tax charged to the biggest CO2 emitters, such as power plants and heavy manufacturers, at £18 a tonne for ten years from 2016. This is instead of hiking it to well over £30 over the same period.
The resulting energy bill savings from this would leave the average manufacturing company £50,000 better of a year. The Chancellor also said he would give a further £1 billion to energy-intensive firms to compensate them for the green levies on their bills.
New £1 coin
Finally, the Government will introduce a new and highly secure £1 coin. The proposed new coin is bi-metallic with 12 sides, and adopts new Royal Mint technology which will protect the coin against counterfeiting.
The new coin is being planned to be introduced in 2017 and a public consultation will be held over the summer focusing on how to manage any impacts to industry, and there will be a competition to decide the design on the reverse or ‘tails’ of the new coin.
For the full Budget click here