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| What could be in the 2009 Budget | What could be in the 2009 Budget |
| (4 days later) | |
| The Chancellor will deliver his second budget on 22 April | The Chancellor will deliver his second budget on 22 April |
| On Wednesday 22 April, the Chancellor Alistair Darling will present his second Budget amid grim economic news. | |
| BBC News takes a look at the main elements that are likely to be included in this year's budget, and what has already been announced in the pre-Budget report in November. | BBC News takes a look at the main elements that are likely to be included in this year's budget, and what has already been announced in the pre-Budget report in November. |
| href="#economy"> The Economy href="#taxes"> Taxes and spending href="#business"> Help for business href="#savers"> Savers href="#homeowners"> Homeowners href="#green"> Green Budget | |
| THE STATE OF THE ECONOMY | THE STATE OF THE ECONOMY |
| The chancellor is required to make a new economic forecast in the Budget. | The chancellor is required to make a new economic forecast in the Budget. |
| He has already prepared the ground for lowering his economic growth forecasts by admitting that the Treasury underestimated the depth of the recession. | He has already prepared the ground for lowering his economic growth forecasts by admitting that the Treasury underestimated the depth of the recession. |
| He could predict an economic contraction of as much as 3% of GDP this year - up from his earlier forecast in November's pre-Budget report of a slowdown of between 0.75% to 1.25% in 2009, with economic growth recovering to between 1.75% and 2.25% in 2010. | He could predict an economic contraction of as much as 3% of GDP this year - up from his earlier forecast in November's pre-Budget report of a slowdown of between 0.75% to 1.25% in 2009, with economic growth recovering to between 1.75% and 2.25% in 2010. |
| That would be in accord with independent forecasters who see the UK economy contracting by 3.7% in 2009 and growing by just 0.3% in 2010. | That would be in accord with independent forecasters who see the UK economy contracting by 3.7% in 2009 and growing by just 0.3% in 2010. |
| Government borrowing estimates are also likely to balloon. | Government borrowing estimates are also likely to balloon. |
| The chancellor's prediction of a public sector deficit of £118bn next year (2009-10) could rise to £150bn, according to the Institute for Fiscal Studies, while independent forecasters on average predict a deficit of £160bn. | The chancellor's prediction of a public sector deficit of £118bn next year (2009-10) could rise to £150bn, according to the Institute for Fiscal Studies, while independent forecasters on average predict a deficit of £160bn. |
| href="/1/hi/uk_politics/7984889.stm"> IFS warns of bigger deficit | |
| Many commentators warn that the biggest factor in paying back the deficit will be the length of the recession. A deeper recession would push back the date for any improvement in the cumulative total of public sector debt, which could reach 80% of GDP by 2016. | Many commentators warn that the biggest factor in paying back the deficit will be the length of the recession. A deeper recession would push back the date for any improvement in the cumulative total of public sector debt, which could reach 80% of GDP by 2016. |
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| TAX RISES/SPENDING CUTS | TAX RISES/SPENDING CUTS |
| The government is likely to announce more tax increases to take effect from 2011 or 2012 to meet the growing budget deficit. | The government is likely to announce more tax increases to take effect from 2011 or 2012 to meet the growing budget deficit. |
| It has already been announced in the pre-Budget report that earners over £100k will get lower personal allowances in 2011. | It has already been announced in the pre-Budget report that earners over £100k will get lower personal allowances in 2011. |
| A new 45% higher income tax rate is proposed for earnings above £150,000 from April 2011 - hitting about 1% of tax payers. | A new 45% higher income tax rate is proposed for earnings above £150,000 from April 2011 - hitting about 1% of tax payers. |
| And from April 2011, all rates of National Insurance contributions will be increased by 0.5% for all employees and employers. | And from April 2011, all rates of National Insurance contributions will be increased by 0.5% for all employees and employers. |
| There is also speculation about increasing the standard rate of VAT, which is due to return to 17.5% in December. | There is also speculation about increasing the standard rate of VAT, which is due to return to 17.5% in December. |
| Accountants Deloitte calculate that an increase from 17.5% to 18.5% would raise £5bn year for the government. Ernst and Young see VAT going up to 20% over the next few years. | Accountants Deloitte calculate that an increase from 17.5% to 18.5% would raise £5bn year for the government. Ernst and Young see VAT going up to 20% over the next few years. |
| Spending cuts, which may also be necessary, are unlikely to be announced immediately, pending a new comprehensive spending review. | Spending cuts, which may also be necessary, are unlikely to be announced immediately, pending a new comprehensive spending review. |
| The Institute of Fiscal Studies says one possibility is a five-year real freeze on current spending by all government departments. | The Institute of Fiscal Studies says one possibility is a five-year real freeze on current spending by all government departments. |
| In the pre-Budget report, the government brought forward £3bn of capital expenditure to this year from 2010/2011. The funds would be spent on roads, schools, social housing and energy investment. | In the pre-Budget report, the government brought forward £3bn of capital expenditure to this year from 2010/2011. The funds would be spent on roads, schools, social housing and energy investment. |
| Public sector pay could be another target. Prime Minister Gordon Brown has already announced that some top public servants will see their pay rises capped at 1.5% next year, and the Conservatives say curbing public sector pay should be a priority. | Public sector pay could be another target. Prime Minister Gordon Brown has already announced that some top public servants will see their pay rises capped at 1.5% next year, and the Conservatives say curbing public sector pay should be a priority. |
| href="/1/hi/uk_politics/7984608.stm"> End pay excesses, say Tories href="#top"> return to top | |
| HELP FOR BUSINESSES | HELP FOR BUSINESSES |
| As the recession deepens, there are more and more calls for help from companies. | As the recession deepens, there are more and more calls for help from companies. |
| The chancellor has already hinted there will be action to help employers in the Budget, saying it would be 'indefensible' for the government to hold back from action to save jobs. | The chancellor has already hinted there will be action to help employers in the Budget, saying it would be 'indefensible' for the government to hold back from action to save jobs. |
| The car industry want the government to introduce a 'cash for bangers' scheme, which is reportedly being supported by the business secretary, Lord Mandelson. | The car industry want the government to introduce a 'cash for bangers' scheme, which is reportedly being supported by the business secretary, Lord Mandelson. |
| The Society for Motors and Manufacturing are calling for a £2,000 bonus for consumers who trade in their old cars for new. However, the Treasury is reportedly reluctant as most new cars are imported into the UK, not built here. | The Society for Motors and Manufacturing are calling for a £2,000 bonus for consumers who trade in their old cars for new. However, the Treasury is reportedly reluctant as most new cars are imported into the UK, not built here. |
| href="7995928"> UK moves towards car scrap scheme | |
| There are also reports that the Treasury will introduce a scheme to help businesses who are finding it difficult to get credit insurance. | There are also reports that the Treasury will introduce a scheme to help businesses who are finding it difficult to get credit insurance. |
| href="/1/hi/business/7999419.stm"> Firms to get credit risk help | |
| The chancellor has said he will publish new proposals with the Budget for a voluntary code to ensure the banks do not dodge paying taxes. | The chancellor has said he will publish new proposals with the Budget for a voluntary code to ensure the banks do not dodge paying taxes. |
| These are not illegal, but they are certainly now deemed politically unacceptable given the expense of the public rescue of the banking system. | These are not illegal, but they are certainly now deemed politically unacceptable given the expense of the public rescue of the banking system. |
| And there is likely to be further action in regard to British offshore financial centres, such as Jersey and the Isle of Man, following the G20 summit and the conclusions of an independent inquiry. | And there is likely to be further action in regard to British offshore financial centres, such as Jersey and the Isle of Man, following the G20 summit and the conclusions of an independent inquiry. |
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| HELP FOR SAVERS | HELP FOR SAVERS |
| With the government keen to encourage people to save rather than borrow, there may be some tax changes to help savers. | With the government keen to encourage people to save rather than borrow, there may be some tax changes to help savers. |
| Deloitte say the best thing would be to abolish 20% tax on the interest on savings. While average interest rates are low, that would not cost government a lot - about £600m with average rates below 1%. | Deloitte say the best thing would be to abolish 20% tax on the interest on savings. While average interest rates are low, that would not cost government a lot - about £600m with average rates below 1%. |
| The chancellor could introduce a special increase to pensioners' tax allowances , which would make more of their income tax-free. | The chancellor could introduce a special increase to pensioners' tax allowances , which would make more of their income tax-free. |
| Another possibility is increasing the limit on a cash ISA. At the moment, the amount allowed in this tax-free investment stands at £3,600 per year. | Another possibility is increasing the limit on a cash ISA. At the moment, the amount allowed in this tax-free investment stands at £3,600 per year. |
| The Conservatives have described savers as 'the innocent victims of the recession'. They have backed calls to scrap the tax on savings and have said they want to raise the tax-free allowances - the level of income on which no tax is paid - by £2,000 for everyone over 65. | The Conservatives have described savers as 'the innocent victims of the recession'. They have backed calls to scrap the tax on savings and have said they want to raise the tax-free allowances - the level of income on which no tax is paid - by £2,000 for everyone over 65. |
| href="/1/hi/uk_politics/7810932.stm"> Cameron promises help for savers | |
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| HELP FOR HOMEOWNERS | HELP FOR HOMEOWNERS |
| The last budget raised the point at which a house buyer starts paying stamp duty temporarily from £125,000 to £175,000. With the housing market still depressed, this could be extended. | The last budget raised the point at which a house buyer starts paying stamp duty temporarily from £125,000 to £175,000. With the housing market still depressed, this could be extended. |
| The chancellor is also due to give his full response to the call in the Crosby report for additional government funds to kick-start the mortgage market and meet the shortfall in mortgage funding. | The chancellor is also due to give his full response to the call in the Crosby report for additional government funds to kick-start the mortgage market and meet the shortfall in mortgage funding. |
| And he may give further details of the schemes already underway to aid those who are in danger of losing their homes. | And he may give further details of the schemes already underway to aid those who are in danger of losing their homes. |
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| GREEN BUDGET | GREEN BUDGET |
| The CBI is arguing that the government should use the recession as a reason to boost green technologies in ways which could also stimulate commerce. | The CBI is arguing that the government should use the recession as a reason to boost green technologies in ways which could also stimulate commerce. |
| The government has already announced that it will provide a £5000 subsidy for the purchase of electric and hybrid cars, as well as providing £20m for local councils to install electric vehicle charging points. | The government has already announced that it will provide a £5000 subsidy for the purchase of electric and hybrid cars, as well as providing £20m for local councils to install electric vehicle charging points. |
| href="/1/hi/business/8001254.stm"> Green car subsidy unveiled | |
| And there are also expectations that a new and radical innovation in the Budget will be the adoption of legally binding greenhouse gas emissions targets for each five-year period to 2022. | And there are also expectations that a new and radical innovation in the Budget will be the adoption of legally binding greenhouse gas emissions targets for each five-year period to 2022. |
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