Darling points at silver lining, floats investment in broadband
Want some of what he's drinking? It'll cost you
Budget 09 Chancellor of the Exchequer Alistair Darling today used what is likely to be his last Budget to paint an optimistic view of the UK economy and the path out of the world recession.
Darling said: "We will work to support green industries of the future as well as re-building our financial services." He claimed Britain's economy was better placed to recover than those of Germany, Japan and the euro zone as a whole.
The Chancellor predicted the UK economy would decline 3.5 per cent this year, but would return to growth later this year and grow by 1.25 per cent in 2010. By 2011 he predicted annual growth of 3.5 per cent. This is an optimistic target for an economy which has shrunk by 1.25 per cent in the last two quarters.
A car scrappage scheme will be introduced next month to provide £2,000 discounts for people trading in cars older than ten years old for new cars. It will run until March 2010 and Mandelson will provide more details this afternoon.
Darling announced a new 50 per cent tax rate for top earners from next April - this was expected to be 45 per cent.
Businesses should benefit from a doubling of capital allowances to 40 per cent. Darling said he would support investment into a better broadband network extending into "almost every community", but gave no details on what this actually meant.
He said high technology businesses, and environmental businesses, will play a major role in getting us out of recession. Darling said there would be £435m investment in energy efficiency products for homes and businesses. Offshore wind projects will also be supported over the next two years to help hit targets of cutting carbon emissions by 34 per cent by 2020.
Darling said 100,000 businesses were already benefitting from deferring tax bills. He said he would extend this so loss-making firms can reclaim last three years of tax up until 2010.
Most of the "big ideas" were pre-leaked in order not to spook the markets. These include finding £15bn in savings from government budgets , subsidies for new cars if an old vehicle is scrapped, help for the housing market and £90bn in public borrowing.
Tax relief on pensions will be restricted for those earning more than £150,000 from April 2011. Unemployed under-25 year olds will be guaranteed a job or a training place with the help of £260m in spending.
The UK's net debt will rise from 12.4 per cent of GDP this year, or £175bn, then fall to £173bn, then £140bn followed by £118bn.
Taxes on tobacco and alcohol go up two per cent from 6.00pm tonight.
There will be £500m available to kickstart housing projects frozen by the credit crunch. This includes £100m for local authorities to build low energy homes.
The limit for ISAs has also been increased from £7,200 to £10,200.