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Darling 'to cut growth forecasts' Darling 'to cut growth forecasts'
(about 1 hour later)
Chancellor Alistair Darling will have to cut his economic growth forecasts when he presents this year's Budget, analysts have predicted. Chancellor Alistair Darling will have to cut his economic growth forecasts when he presents the Budget on Wednesday, analysts have predicted.
With the economy hit by the continuing global credit squeeze and higher energy and food bills, commentators also predict no real surprises.With the economy hit by the continuing global credit squeeze and higher energy and food bills, commentators also predict no real surprises.
Investec Securities economist Philip Shaw said Mr Darling will most likely cut forecasts for the next two years.Investec Securities economist Philip Shaw said Mr Darling will most likely cut forecasts for the next two years.
Reports suggest new green taxes could be unveiled in Wednesday's budget. Reports suggest that new tax-raising green measures could also be unveiled.
'Economy faltering''Economy faltering'
Mr Darling has already cut his economic growth forecast for 2008 to 2%-2.5% from the previous 2.5%-3%, but Mr Shaw expects a further reduction.Mr Darling has already cut his economic growth forecast for 2008 to 2%-2.5% from the previous 2.5%-3%, but Mr Shaw expects a further reduction.
Full Budget special reportFull Budget special report
Fellow economist Howard Archer, of Global Insight, agrees, saying Mr Darling will blame factors outside his control.Fellow economist Howard Archer, of Global Insight, agrees, saying Mr Darling will blame factors outside his control.
"Darling is likely to attribute much of the UK slowdown to a weaker global growth, tighter lending conditions influenced markedly by the US subprime mortgage crisis, and high energy, food and commodity prices," said Mr Archer."Darling is likely to attribute much of the UK slowdown to a weaker global growth, tighter lending conditions influenced markedly by the US subprime mortgage crisis, and high energy, food and commodity prices," said Mr Archer.
He added that as a result, "it is unlikely that the chancellor will be prepared to enact major tax raising measures and/or public spending cuts at a time when the economy is faltering markedly".He added that as a result, "it is unlikely that the chancellor will be prepared to enact major tax raising measures and/or public spending cuts at a time when the economy is faltering markedly".
Mr Darling is facing a Budget deficit of £38bn, and a slowing economy will make it much more difficult for him to bring the government finances back into balance.
So in the longer term, taxes may have to go up, or spending cut back, to meet the shortfall.
Green taxesGreen taxes
Reports suggest that one of the most likely Budget announcements will be an additional £2,000 tax on the least fuel-efficient cars.Reports suggest that one of the most likely Budget announcements will be an additional £2,000 tax on the least fuel-efficient cars.
HAVE YOUR SAYI would like to see life made easier and simpler for the old age pensioner Saqib Khan, Essex Send us your commentsHAVE YOUR SAYI would like to see life made easier and simpler for the old age pensioner Saqib Khan, Essex Send us your comments
There are also suggestions that supermarkets will be required to charge for disposable plastic bags if they do not voluntarily scrap them.There are also suggestions that supermarkets will be required to charge for disposable plastic bags if they do not voluntarily scrap them.
Such measures may not please consumers, if a survey released on Tuesday by market research firm YouGov is to be believed.Such measures may not please consumers, if a survey released on Tuesday by market research firm YouGov is to be believed.
Speaking to 2,000 people, YouGov said a majority saw such green taxes as a primarily a means to boost the government's finances.Speaking to 2,000 people, YouGov said a majority saw such green taxes as a primarily a means to boost the government's finances.
Binge drinkingBinge drinking
Mr Darling is also predicted to raise the duty on alcohol to address public concern at binge drinking.Mr Darling is also predicted to raise the duty on alcohol to address public concern at binge drinking.
CORPORATION TAX RATES Italy 37.2%Germany 29.8%UK 28%Netherlands 25.5%CORPORATION TAX RATES Italy 37.2%Germany 29.8%UK 28%Netherlands 25.5%
The Conservatives said last week they would raise tax on super-strength beer, cider and alcopops to tackle binge drinking if they won the next general election.The Conservatives said last week they would raise tax on super-strength beer, cider and alcopops to tackle binge drinking if they won the next general election.
The chancellor is further expected to provide help for poor families hit by higher energy costs.The chancellor is further expected to provide help for poor families hit by higher energy costs.
This could come in the form of reducing the difference between what energy companies charge pre-payment customers and those who pay by direct debit.This could come in the form of reducing the difference between what energy companies charge pre-payment customers and those who pay by direct debit.
Analysts are divided over whether Mr Darling will also press ahead with a 2p-a-litre rise in fuel duty.Analysts are divided over whether Mr Darling will also press ahead with a 2p-a-litre rise in fuel duty.
Corporation taxCorporation tax
Mr Darling also faces a demand from business to cut corporation tax.Mr Darling also faces a demand from business to cut corporation tax.
But dramatic tax cuts look unlikely, given economic uncertainty and strained public finances.But dramatic tax cuts look unlikely, given economic uncertainty and strained public finances.
The Confederation of British Industry (CBI) has said that high taxes on business are damaging the UK economy.The Confederation of British Industry (CBI) has said that high taxes on business are damaging the UK economy.
It wants corporation tax cut from 28% to 18% by 2016 and a simpler system introduced.It wants corporation tax cut from 28% to 18% by 2016 and a simpler system introduced.
However, unions say a cut in corporation tax would lead to tax hikes for "ordinary people".However, unions say a cut in corporation tax would lead to tax hikes for "ordinary people".