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Budget 2013: George Osborne halves growth forecast but insists plan is working Budget 2013: George Osborne halves growth forecast but insists plan is working
(35 minutes later)
Chancellor George Osborne has insisted his economic medicine is working, despite being forced to slash growth forecasts for the UK in his Budget.Chancellor George Osborne has insisted his economic medicine is working, despite being forced to slash growth forecasts for the UK in his Budget.
In a package of measures aimed at "those who want to work and get on" he cut corporation tax to 20% and cancelled a planned fuel duty rise. In a package of measures aimed at "those who want to work and get on" he cut corporation tax to 20% and froze petrol duty rises.
He also cancelled alcohol duty rises and cut the price of beer by 1p a pint. He also cancelled alcohol duty rises, cut beer by 1p a pint and unveiled measures to boost the housing market.
But Labour leader Ed Miliband attacked it as a "more of the same Budget from a downgraded chancellor". Labour said it was a "more of the same Budget from a downgraded chancellor".
Battling interruptions in a rowdy House of Commons, Mr Osborne said he wanted to "level" with people about "hard decisions" that had to be taken.Battling interruptions in a rowdy House of Commons, Mr Osborne said he wanted to "level" with people about "hard decisions" that had to be taken.
He said that although it was taking longer than expected "we are, slowly but surely, fixing our country's economic problems".He said that although it was taking longer than expected "we are, slowly but surely, fixing our country's economic problems".
He unveiled a raft of gloomy economic forecasts, saying growth in 2013 would be 0.6% - half the 1.2% he predicted four months ago in his autumn statement. "If you want to work hard and get on; we are on your side," said the chancellor, adding it was a Budget "for an aspiration nation".
'Tough decisions' Although he predicted the UK would avoid a "triple dip" recession he said growth in 2013 would be 0.6% - half the 1.2% he predicted four months ago in his autumn statement.
His revised forecast is for the UK's national debt to rise to 85% of GDP and not start coming down until 2017/18 - a year later than previously predicted. And he said the UK's national debt would rise to 85% of GDP and not start coming down until 2017/18 - two years later than predicted when the coalition came to power.
But he said the country would avoid a "triple dip" recession and predicted the deficit would continue to come down thanks to the "many tough decisions" taken by the government. Mr Osborne had little room to manoeuvre when it came to tax giveaways - but he found some extra cash by squeezing public spending further, extending a public sector pay freeze by a year and other measures.
He also managed to find cash from a new squeeze on public spending, extending a public sector pay freeze and other measures for some modest giveaways. This allowed him to bring forward the introduction of a £10,000 income tax threshold by a year, to 2014 - in a move that pleased the Lib Dems, who campaigned on the issue at the last election.
In moves aimed at helping "hard working" people on low incomes, he will introduce a £10,000 income tax threshold a year early, in 2014 - in a move that pleased the Lib Dems, who campaigned on the issue at the last election. And in an effort to help Britain's construction industry and help young people get on the housing ladder he unveiled a new "shared equity" scheme for those struggling to find mortgage deposits and "mortgage guarantee" for those struggling to raise a deposit.
Small businesses will get a £2,000 allowance for firms before paying employer National Insurance contributions, a move Mr Osborne described as "taking tax off jobs". A government interest-free loan worth 20% of the value of a new-build house will also be available to everyone who wants to buy a home from next year.
The government will also offer interest-free loans for five years for those wanting to buy new-build homes.
Small businesses will get a £2,000 allowance before paying employer National Insurance contributions, a move Mr Osborne described as "taking tax off jobs".
And he cut corporation tax from 21% to 20%, merging the small company and main rate.And he cut corporation tax from 21% to 20%, merging the small company and main rate.
He also brought cheer to Tory backbenchers campaigning to save the pub trade by scrapping the alcohol tax escalator, where prices increased at 2% above inflation every year, and announced a 1p cut in the price of a pint of beer. He also brought cheer to Tory backbenchers campaigning to save the pub trade by scrapping the alcohol tax escalator, where prices increased at 2% above inflation every year.
And he unveiled measures aimed at helping home-buyers including an extension of shared equity schemes. He also announced a 1p cut in the price of a pint of beer - angering the whiskey and wine industries who dubbed it unfair.
He also announced that the Bank of England Monetary Policy Committee had been given an updated broader remit, but keeps its 2% inflation target. In other measures, he cancelled a fuel duty rise planned for the autumn and announced that the Bank of England Monetary Policy Committee had been given an updated broader remit, but keeps its 2% inflation target.
Mr Osborne has resisted Labour calls to change economic course despite the threat of a dip back into recession and the loss of the UK's triple A credit rating, insisting the economy was on the right track. Mr Osborne ignored calls by Lib Dem Business Secretary Vince Cable to borrow more to boost growth with a big building programme.
And he ignored calls by Lib Dem Business Secretary Vince Cable to borrow more to boost growth with a big building programme.
'Pain''Pain'
But he did announce £2.5bn of spending on infrastructure. Details of where the spending cuts that will pay for it will come will be announced in June when the government unveils its spending review. But he did announce £2.5bn of spending on infrastructure paid for by a fresh public spending squeeze. Details of where the axe will fall will be announced in June when the government unveils its spending review.
The chancellor's financial statement comes against a backdrop of grim economic news, with unemployment climbing by 7,000 to 2.52 million between November and January, according to official figures.
Labour leader Ed Miliband told MPs Mr Osborne's message had not changed since the coalition had come to power, that voters would suffer four years of tax rises and spending cuts before "good times" returned.Labour leader Ed Miliband told MPs Mr Osborne's message had not changed since the coalition had come to power, that voters would suffer four years of tax rises and spending cuts before "good times" returned.
"Three years on, what does he say? Exactly what he said three years ago."Three years on, what does he say? Exactly what he said three years ago.
"We still need four more years of pain, tax rises and spending cuts. In other words, after all the misery, all the harsh medicine, all the suffering by the British people, three years, no progress, deal broken.""We still need four more years of pain, tax rises and spending cuts. In other words, after all the misery, all the harsh medicine, all the suffering by the British people, three years, no progress, deal broken."
The Labour leader said the Office for Budget Responsibility had confirmed living standards would fall over the course of the Parliament, meaning families would be worse off in 2015 than they had been in 2010.The Labour leader said the Office for Budget Responsibility had confirmed living standards would fall over the course of the Parliament, meaning families would be worse off in 2015 than they had been in 2010.
And he mocked the chancellor to make any reference to Britain's loss of its Triple A rating with credit agencies during his hour long budget speech. And he mocked the chancellor's failure to make any reference to Britain's loss of its Triple A rating with credit agencies during his hour long budget speech.
He also asked the chancellor how details of the Budget came to be published via a tweet from the Evening Standard before the speech had been delivered.He also asked the chancellor how details of the Budget came to be published via a tweet from the Evening Standard before the speech had been delivered.
Ahead of the Budget the government announced plans for some parents in the UK to be able to claim back up to £1,200 a year for each child - or 20% of childcare costs - from 2015.Ahead of the Budget the government announced plans for some parents in the UK to be able to claim back up to £1,200 a year for each child - or 20% of childcare costs - from 2015.
Mr Cameron said the plans, expected to cost £1.4bn, would be a "boost direct to the pockets of hard-working families" but it has been criticised in sections of the press for penalising stay-at-home parents.Mr Cameron said the plans, expected to cost £1.4bn, would be a "boost direct to the pockets of hard-working families" but it has been criticised in sections of the press for penalising stay-at-home parents.
Meanwhile, members of the UK's largest civil service union, the Public and Commercial Services Union, are staging a 24-hour strike on Wednesday in a dispute over pay, pensions and working conditions.Meanwhile, members of the UK's largest civil service union, the Public and Commercial Services Union, are staging a 24-hour strike on Wednesday in a dispute over pay, pensions and working conditions.
Government departments, driving test centres, museums and job centres are among workplaces expected to be hit while meetings at the Welsh assembly have been rearranged because Labour and Plaid Cymru members will not cross a picket line.Government departments, driving test centres, museums and job centres are among workplaces expected to be hit while meetings at the Welsh assembly have been rearranged because Labour and Plaid Cymru members will not cross a picket line.
A rally was being held at Westminster while Mr Osborne delivered his Budget.A rally was being held at Westminster while Mr Osborne delivered his Budget.