Britain's chancellor of the exchequer George Osborne has announced higher borrowing and £3.5 billion in extra spending cuts by 2020, with his country's economy set to grow much more slowly than previously forecast.
Mr Osborne used his eighth Budget as chancellor to increase taxes on big business while reducing the burden on smaller firms.
Capital gains tax will be cut from 28 per cent to 20 per cent and corporation tax, which was due to fall from 20 per cent to 18 per cent by 2020, will now be cut to 17 per cent by then. And in his most headline-grabbing move, Mr Osborne will impose a levy on the manufacturers of sugary drinks.
“This is a Budget that gets investors investing, savers saving, businesses doing business; so that we build for working people a low tax, enterprise Britain; secure at home, strong in the world,” the chancellor said.
In response to public outrage over tax avoidance by some online retailers, the chancellor will make firms like Amazon and Ebay responsible for ensuring that retailers based outside Europe who use their platforms to sell stock in Britain pay any VAT due.
Mr Osborne admitted that he has missed his self-imposed target of ensuring that debt would fall as a proportion of GDP this year, blaming sluggish growth and global economic turbulence. He said the UK was still on course to clear its deficit by 2019/20, despite slower than expected growth.
Growth forecast
The Office of Budget Responsibility has revised its growth forecasts downwards for the coming years, with the economy expected to grow by 2 per cent in 2016 in 2016, down from the 2.4 per cent forecast in November’s Autumn Statement. GDP is now expected to grow by 2.2 per cent and 2.1 per cent in 2017 and 2018, down from 2.4 per cent and 2.5 per cent forecast in November.
Despite the fiscal constraints, Mr Osborne promised some relief on personal income tax, so that the rate at which workers start paying top rate tax is to be raised from £42,385 to £45,000 from April next year and the tax-free personal allowance is also being increased.
Mr Osborne announced a £1.5 billion plan to turn all state schools into academies, which are independent of local authorities, by 2022 and to extend the school day by an hour in some schools. He pledged £300 million for major transport projects, including a new rail line running from north to south beneath central London and a high speed rail link across the north of England.
Labour leader Jeremy Corbyn said the budget had "unfairness at its very core paid for by those who can least afford it", describing it as the culmination of six years of failure.
“This is a recovery built on sand and a budget built on failure. The chancellor has failed on the budget deficit failed on debt, failed on investment, failed on productivity, failed on the trade deficit, failed on his own welfare cap and failed to tackle inequality in this country,” he said.
