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| Budget to confront economic woes | Budget to confront economic woes |
| (about 2 hours later) | |
| Chancellor Alistair Darling is due to give a Budget statement to match the severity of the economic downturn. | Chancellor Alistair Darling is due to give a Budget statement to match the severity of the economic downturn. |
| He is expected to unveil soaring public borrowing and the worst recession since the end of the Second World War. | He is expected to unveil soaring public borrowing and the worst recession since the end of the Second World War. |
| Tax rises and spending cuts from 2011 are likely as Mr Darling sets out his plans to restore public finances. | Tax rises and spending cuts from 2011 are likely as Mr Darling sets out his plans to restore public finances. |
| However, the International Monetary Fund (IMF) admitted it made a mistake when it claimed the UK faced a £200bn bill for bailing out the banks. | |
| A Treasury spokesman said the figure had been issued in the IMF's Global Financial Stability Report in error. | |
| "The Budget will make a prudent provision for potential losses from banking interventions in line with our cautious approach to forecasting the public finances," the spokesman said. | "The Budget will make a prudent provision for potential losses from banking interventions in line with our cautious approach to forecasting the public finances," the spokesman said. |
| Mr Darling will reveal his own estimate of the bail-out cost - reported to be more like £60bn - when he delivers the Budget. | Mr Darling will reveal his own estimate of the bail-out cost - reported to be more like £60bn - when he delivers the Budget. |
| Borrowing forecasts | Borrowing forecasts |
| Weeks ahead of his second Budget as chancellor, Mr Darling had already acknowledged that the recession would be worse than he had predicted. | Weeks ahead of his second Budget as chancellor, Mr Darling had already acknowledged that the recession would be worse than he had predicted. |
| In his new economic forecast on Wednesday he is expected to revise his predictions of last November that the economy will contract by between 0.75% and 1.25% of Gross Domestic Product in 2009. | In his new economic forecast on Wednesday he is expected to revise his predictions of last November that the economy will contract by between 0.75% and 1.25% of Gross Domestic Product in 2009. |
| If, as expected, he now predicts a slowdown of as much as 3.5% of GDP - it would make this the worst recession since 1945. | If, as expected, he now predicts a slowdown of as much as 3.5% of GDP - it would make this the worst recession since 1945. |
| He is also expected to revise his public sector borrowing forecasts, as tax revenues fall. | He is also expected to revise his public sector borrowing forecasts, as tax revenues fall. |
| The government calls these efficiency savings but let's be clear, they are real cuts that will affect public services, people's jobs, livelihoods and pensions Mark SerwotkaUnison What could be in the 2009 Budget Meltdown losses of '$4 trillion' Inflation measure turns negative | The government calls these efficiency savings but let's be clear, they are real cuts that will affect public services, people's jobs, livelihoods and pensions Mark SerwotkaUnison What could be in the 2009 Budget Meltdown losses of '$4 trillion' Inflation measure turns negative |
| Experts believe his £118bn prediction for borrowing for 2009-10 could be increased to as much as £160bn. | Experts believe his £118bn prediction for borrowing for 2009-10 could be increased to as much as £160bn. |
| Mr Darling is expected to explain how he intends to get the public finances back on track - possibly with future tax increases and spending cuts that would come in after the next general election. | Mr Darling is expected to explain how he intends to get the public finances back on track - possibly with future tax increases and spending cuts that would come in after the next general election. |
| He announced last November that people earning more than £100,000 a year would get lower personal allowances from 2011. | He announced last November that people earning more than £100,000 a year would get lower personal allowances from 2011. |
| And there will be a new 45% top rate of income tax from April 2011 on earnings over £150,000 - which Mr Darling hopes will raise £1.6bn a year, although the Institute for Fiscal Studies has predicted it will only raise about £550m. | And there will be a new 45% top rate of income tax from April 2011 on earnings over £150,000 - which Mr Darling hopes will raise £1.6bn a year, although the Institute for Fiscal Studies has predicted it will only raise about £550m. |
| 'Few easy wins' | 'Few easy wins' |
| The VAT rate, temporarily lowered to 15% last December, is due to go back up to 17.5% at the end of the year and there has been speculation that it may go up further, to 18.5%. | The VAT rate, temporarily lowered to 15% last December, is due to go back up to 17.5% at the end of the year and there has been speculation that it may go up further, to 18.5%. |
| The Treasury also says it could make £15bn spending cuts through "efficiency savings" from 2010 - although a report from a panel of independent advisers to the Treasury warned the government there would be "few easy wins" and the projected savings were not certain. | The Treasury also says it could make £15bn spending cuts through "efficiency savings" from 2010 - although a report from a panel of independent advisers to the Treasury warned the government there would be "few easy wins" and the projected savings were not certain. |
| The full benefits of "sustained action" would not be seen until 2013-14, they said. | The full benefits of "sustained action" would not be seen until 2013-14, they said. |
| The proposal has annoyed the public service union Unison, whose general secretary Mark Serwotka, who said the government should concentrate on getting tax from the "super rich" and big corporations. | The proposal has annoyed the public service union Unison, whose general secretary Mark Serwotka, who said the government should concentrate on getting tax from the "super rich" and big corporations. |
| "The government calls these efficiency savings but let's be clear, they are real cuts that will affect public services, people's jobs, livelihoods and pensions," he said. | "The government calls these efficiency savings but let's be clear, they are real cuts that will affect public services, people's jobs, livelihoods and pensions," he said. |
| Mr Darling has already indicated there will be help for employers to save jobs and there have been suggestions there will be a car scrapping scheme, which could see people get £2,000 to trade in their old cars for new. | Mr Darling has already indicated there will be help for employers to save jobs and there have been suggestions there will be a car scrapping scheme, which could see people get £2,000 to trade in their old cars for new. |
| Housing package | Housing package |
| Gordon Brown has said the Budget will plot a "green" route to economic recovery. Mr Darling is expected to announce the world's first legally-binding budgets for greenhouse gases in an effort to get the UK to cut emissions by between 34% and 42% by 2022. | Gordon Brown has said the Budget will plot a "green" route to economic recovery. Mr Darling is expected to announce the world's first legally-binding budgets for greenhouse gases in an effort to get the UK to cut emissions by between 34% and 42% by 2022. |
| A £1bn package aimed at boosting house sales and house building is expected to include a three-month extension on the stamp duty "holiday" on homes costing below £175,000, which will remain in place until the end of the year. | A £1bn package aimed at boosting house sales and house building is expected to include a three-month extension on the stamp duty "holiday" on homes costing below £175,000, which will remain in place until the end of the year. |
| Shadow chancellor George Osborne said the estimates of the cost of the bank bail-outs showed the "potentially massive cost of Gordon Brown's utter failure to regulate the banking system". | Shadow chancellor George Osborne said the estimates of the cost of the bank bail-outs showed the "potentially massive cost of Gordon Brown's utter failure to regulate the banking system". |
| Lib Dem Treasury spokesman Vince Cable said shareholders, bank customers and the tax payer would bear the "massive cost" of the failure of the banking system. | Lib Dem Treasury spokesman Vince Cable said shareholders, bank customers and the tax payer would bear the "massive cost" of the failure of the banking system. |
| The Tories say the Budget will be a "day of reckoning" which will "lay bare" Labour's economic failings. | The Tories say the Budget will be a "day of reckoning" which will "lay bare" Labour's economic failings. |
| Mr Osborne has urged the chancellor to focus on how to reduce government debt rather than "short-term political pressures" ahead of a likely election in 2010. | Mr Osborne has urged the chancellor to focus on how to reduce government debt rather than "short-term political pressures" ahead of a likely election in 2010. |