UK’s Chancellor of Exchequer Alistair Darling today unveiled the new budget for the UK. The highlight of the new proposal falls upon the increase in taxation that Darling put forth. The rich Brits earning more than £150,000 will now see their income taxed by 50%. This is expected to affect 1% of earners. He also pledged the following measures:
• Tobacco duty will rise 2% from 6pm today.
• Alcohol duties will rise 2% from midnight. Along with tobacco duties, both aim to raise £6bn by 2012.
• Fuel duty will rise 2% from September and 1% above indexation every April for next the four years.
• The stamp duty holiday on homes under £175,000 will be extended until the end of 2009.
• A car scrapping scheme will offer a £2,000 discount on new cars when vehicles over 10 years old are traded in.
• The child element of the child tax credit will increase by £20 from April next year.
• State redundancy pay will rise from £350 to £380 a week.
• Grandparent care for young relatives will count towards the basic state pension.
• The annual ISA limit will increase from £7,200 to £10,200.
• £525m will go to offshore wind power projects and £405m new funding to low-carbon technology projects.
Talking about the UK’s debt, he forecast that the net debt to GDP will rise to 59% this fiscal year, to 68% in the 2010 fiscal year, 74% in 2011-12, 78% in 2012-2013 and 79% in 2013-2014; it will only begin to stabilize and fall by 2015-2016. That doesn’t mean the budget would be balanced by then.
He also showed some form of optimism by predicting that by 2010, the UK will be growing by 1.25% and 3.25% in 2011. For the meantime, 2009 is predicted to decline by 3.5% with recovery starting by the end of the year. Inflation is forecast to be 1% for the year and he requested that the Bank of England confirm that inflation target remains 2%.
The budget also includes:
- £260 million for training of and subsidies to young people the citizens in light of the growing unemployment and a further £250m this year and £400m in 2010-11 for those between the ages of 16 and 17 to stay in school or get training if they desired
- from January, everyone under the age of 25, who has been out of work for 12 months, will be offered a job or a place in training; these new jobs will cover up to 250,000 new jobs
- £80m extension to HomeBuy Direct – the Government shared equity mortgage scheme