UK 2009 Budget: More Borrowing

UK chancellor Alistair Darling announced a significant increase in future borrowing and forecasted that UK economy will start to recover by Q4 2009.

The main measures are:

“ British economy forecast to shrink in 2009 by 3.5%. Growth forecast for 2010: 1.25%; and 2011 onwards: 3.5% a year.
• Inflation (CPI) expected to reach 1% by end of 2009. RPI will fall to -3.5% by end of year.
• No income tax increases in 2009.
• Income tax rate on those earning more than £150,000 to increase from 45% to 50% from April 2010, a year earlier than planned.
• Personal tax allowance of those earning over £100,000 to be withdrawn from April 2010.
• 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.
• Fuel duty to rise by 2% from September and 1% above indexation every April for next four years.
• Tobacco duty to rise by 2% from 6pm April 22.
• Alcohol duties to rise by 2% from midnight April 22.
Public Finances:
• Public sector net borrowing of £175bn in 2009, some 12.4% of GDP; £173bn next year, then £140bn, £118bn and £97bn each following year.
• UK net debt, including the cost of stabilising the banking system, at 59% this year, 68% next year, and rising to 79% by 2013-14.
• Inflation target remains at 2%.
• Tax avoidance and evasion loopholes to be closed, resulting in £1bn of extra revenue over the next three years.”

Source: Budget 2009: at a glance (Guardian)