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Darling slashes growth forecast Darling slashes growth forecast
(10 minutes later)
Alistair Darling has forecast in his Budget that the UK economy will shrink by 3.5% - the worst in modern times.Alistair Darling has forecast in his Budget that the UK economy will shrink by 3.5% - the worst in modern times.
But the chancellor said he expected the economy to start expanding again "towards the end of this year". The chancellor also predicted deepening deflation with the RPI measure falling to minus 3% by September.
Mr Darling says Budget measures would steer the UK through the "worst global economic turmoil" in 60 years or more. But he insisted that the economy would begin to pick up by the end of the year, with growth of 1.25% in 2010.
He also announced help for jobless young people and a car scrappage scheme - with £2,000 for people who trade in cars over 10 years old for new ones.
The move is aimed at helping the floundering car industry as part of a wider package to boost industry.
WHAT WAS EXPECTED Growth forecast revised downBorrowing increased£15bn 'efficiency savings'Clawing back tax relief on top earners' pension £2bn help for young unemployed£1bn to boost housing marketCar scrapping scheme Watch live: Video and text At-a-glance: Budget 2009
Mr Darling says the Budget measures would steer the UK through the "worst global economic turmoil" in 60 years or more.
The chancellor is expected to unveil a big rise in borrowing - but also plans to "invest and grow our way out of recession".The chancellor is expected to unveil a big rise in borrowing - but also plans to "invest and grow our way out of recession".
There will also be tax increases and spending cuts from 2011 in an effort to restore the public finances.There will also be tax increases and spending cuts from 2011 in an effort to restore the public finances.
He began his speech by saying the Budget would provide help to get people back into work quickly and support businesses and homeowners facing problems.He began his speech by saying the Budget would provide help to get people back into work quickly and support businesses and homeowners facing problems.
Everyone under the age of 25 out of work for 12 months or more will be offered a job or a place on a training scheme. In addition, the government will create or support up to 250,000 jobs in deprived areas.
Mr Darling also announced an expansion of sixth form and further education places.
There will be measures to support investment in the growth and green industries of the future and the government will work to rebuild Britain's financial services.There will be measures to support investment in the growth and green industries of the future and the government will work to rebuild Britain's financial services.
The chancellor is expected to stress that other countries - including the US - had higher debt levels as share of GDP than Britain.
EXPECTED MEASURES Growth forecast revised downBorrowing increased£15bn 'efficiency savings'Clawing back tax relief on top earners' pension £2bn help for young unemployed£1bn to boost housing marketCar scrapping scheme Watch live: Video and text At-a-glance: Budget 2009
And he is likely to point to an IMF report which will suggest Britain's recession this year will be less deep than some other major industrial nations.
Before departing for the Commons, Mr Darling briefed cabinet colleagues on the contents of his second Budget as chancellor.
The prime minister's official spokesman said the cabinet was in a "realistic and determined" mood after being briefed by Mr Darling.
The top Budget priorities were growth, jobs and "investment in the economy of the future", he added.
'Too weak''Too weak'
He stressed the government must intervene to stop people losing their jobs becoming long-term unemployed.
Conservative leader David Cameron said the Budget represented a "day of reckoning" for the government, proving that its economic policies had not worked.Conservative leader David Cameron said the Budget represented a "day of reckoning" for the government, proving that its economic policies had not worked.
He told BBC News: "We've got to get debt under control, we've got to start to close that deficit, and... I think this government is just too weak to do the job."He told BBC News: "We've got to get debt under control, we've got to start to close that deficit, and... I think this government is just too weak to do the job."
Liberal Democrat Treasury spokesman Vince Cable said people needed "a very clear statement - without spin - about exactly what the situation is in the economy".Liberal Democrat Treasury spokesman Vince Cable said people needed "a very clear statement - without spin - about exactly what the situation is in the economy".
There was grim news on the jobs front ahead of the Budget, with unemployment figures showing the number of people looking for work has reached 2.1 million - its highest level since Labour came to power in 1997.There was grim news on the jobs front ahead of the Budget, with unemployment figures showing the number of people looking for work has reached 2.1 million - its highest level since Labour came to power in 1997.
Car scrappingCar scrapping
Meanwhile, official figures showed that public borrowing soared to a record £90bn in the last financial year - almost 6.2% of national income and far higher than the £78bn prediction made by Mr Darling in his pre-Budget report last November.Meanwhile, official figures showed that public borrowing soared to a record £90bn in the last financial year - almost 6.2% of national income and far higher than the £78bn prediction made by Mr Darling in his pre-Budget report last November.
Mr Darling is expected to plug part of the gap in the public finances with £15bn of "efficiency" cuts from 2010 - after the next election - provoking anger from public service unions.Mr Darling is expected to plug part of the gap in the public finances with £15bn of "efficiency" cuts from 2010 - after the next election - provoking anger from public service unions.
He could also claw back tax relief on the pensions of top earners, although this is only likely to affect those on £100,000 a year or more.He could also claw back tax relief on the pensions of top earners, although this is only likely to affect those on £100,000 a year or more.
There is also likely to be a car scrapping scheme, which could see people get £2,000 to trade in their old cars for new, in an effort to boost the floundering motor industry.
A £1bn package aimed at boosting house sales and house building is expected to include a four-month extension on the stamp duty "holiday" on homes costing below £175,000.A £1bn package aimed at boosting house sales and house building is expected to include a four-month extension on the stamp duty "holiday" on homes costing below £175,000.
From 1pm we will have tax, pension and personal finance experts available to answer your questions about the Budget and how it affects you. If you have a question you can send it to us using the form below:From 1pm we will have tax, pension and personal finance experts available to answer your questions about the Budget and how it affects you. If you have a question you can send it to us using the form below:
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