Chancellor George Osborne's mini budget studied by experts

Chancellor George Osborne

Chancellor George Osborne

First published in News © by

THE impact of George Osborne's prolonged austerity drive is to come under close scrutiny amid Labour claims that the working poor will be hit hard.

Verdicts on the Chancellor's benefits squeeze and other measures will be delivered by bodies including the respected Institute for Fiscal Studies think-tank.

In a bleak Autumn Statement yesterday (December 5), Mr Osborne said painful cuts would continue until at least 2018, as Britain's faltering economy went into reverse.

"The road is hard but we're making progress," he assured MPs.

Most working-age benefits will rise by a below-inflation one per cent for three years to slash £3.7 billion from the welfare bill and another £1 billion will come from a raid on the pensions of the wealthy.

Raising the threshold for the 40 per cent income tax rate by just one per cent will raise another £1 billion but help drag 400,000 more middle-income earners into the higher bracket by the end of the parliament.

Sweeteners included scrapping a planned 3p-a-litre rise in fuel duty, a one per cent cut in corporation tax and changes to allowances which will take earnings below £9,440 out of income tax altogether.

Labour said that the package of benefit and tax changes announced yesterday meant a working family with children on £20,000 a year would lose £279 a year from April.

The party said it was awaiting the detail of legislation required to effect the three-year benefit squeeze before declaring whether it would oppose the measure.

Mr Osborne was also forced to admit that the independent Office for Budget Responsibility now believes he will miss his target for debt to start falling as a proportion of GDP from 2015/16.

That sparked a caution from one credit ratings agency over the chances of Britain retaining its cherished AAA rating when it is reviewed next year.

Fitch said it expected that by 2015 debt would now be "approaching the upper limit of the level consistent with the UK retaining its 'AAA' status".

The Chancellor later downplayed suggestions Britain could lose its AAA credit status.

He told BBC Breakfast: "It wouldn't be a good thing but the credit rating is one of a number of ways in which people look at countries."

Defending Government actions and saying there were other gauges of how the country's financial health should be judged, he said: "We are borrowing money at the moment at some of the lowest rates in British history.

“When people look around the world and look at countries to invest in they think Britain is a good investment."

The OBR downgraded its forecasts for GDP growth in each of the next five years, predicting that the economy will shrink by 0.1 per cent in 2012, rather than growing by 0.8 per cent as they expected in March.

But Labour said the Chancellor was only able to declare good news on borrowing because his figures include an expected £3.5 billion windfall from the auction of 4G telephone spectrum, even though it has not yet happened.

What do you think of the mini-budget? Do you think George Osborne is doing a good job? Have your say below.

Comments (4)

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8:54am Thu 6 Dec 12

Polly Staight says...

"Osborne said painful cuts would continue until at least 2018, as Britain's faltering economy went into reverse."

I suspect that the government will not feel any painful cuts... Particularly as it has been increasing its borrowings, and ramping up its printing press, by more than 7% year since they took (took rather than won) office.

If the government would just go away, the economy would recover very quickly.
"Osborne said painful cuts would continue until at least 2018, as Britain's faltering economy went into reverse." I suspect that the government will not feel any painful cuts... Particularly as it has been increasing its borrowings, and ramping up its printing press, by more than 7% year since they took (took rather than won) office. If the government would just go away, the economy would recover very quickly. Polly Staight
  • Score: 0

9:43am Thu 6 Dec 12

rescaaffering oldey says...

...in the meantime - this government is increasing its foreign aid budget!! wise-up folks!! rofl!!
...in the meantime - this government is increasing its foreign aid budget!! wise-up folks!! rofl!! rescaaffering oldey
  • Score: 0

11:07am Thu 6 Dec 12

Peony says...

I personally have no confidence in this Government or the last Government or any politicians that continue to allow themselves access to generous expense accounts from the public purse while everybody else has to tighten their belts.
I personally have no confidence in this Government or the last Government or any politicians that continue to allow themselves access to generous expense accounts from the public purse while everybody else has to tighten their belts. Peony
  • Score: 0

11:10am Thu 6 Dec 12

rarecockneyguvnor says...

UKIP
UKIP rarecockneyguvnor
  • Score: 0

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