Chancellor George Osborne warned that Britain could quickly become embroiled in financial crisis despite shining as one of the world’s fastest growing advanced economy.
Britain is creating more jobs and growing faster than any advanced economy except the USA, he told MPs in Westminster while on his feet for just over an hour giving his eighth Budget speech.
However, the figures belie his optimism, even though it’s tinged with caution.
Growth is stuttering – the figures are revised down and not exactly inspiring.
GDP is up 2.2% last year, down to 2% this year and back to 2.2% next year and forecast for 2.1% for the following three years.
Sugary drinks lose fizz
Inflation is stubbornly low at 0.7% and predicted to rise to 1.7% next year, but he has tasked the Bank of England with cranking the rate up to at least 2%.
Against that, he tried to raise taxes by another crackdown on avoidance expected to bring £12 billion into the Treasury.
Fizzy drink makers face a hefty sugar tax which should bring in another £500 million.
But despite what the Chancellor described as a ‘challenging’ economic backdrop, he managed to find some tax sweeteners for business and individuals.
Personal tax allowances go up to £11,500 and are due to reach £12,500 by the end of this Parliament in 2019-20 and higher rate tax starts at £45,000 instead of £42,385. The threshold is set for £50,000 by 2020.
Lifetime ISAs were a surprise package, offering savers a 25% top up on £4,000 savings every year with the tax-free cash destined for house purchase or retirement savings – or a mix of both.
Booze and fuel
Other Budget favourites were left unchanged with no duty rises on alcohol or fuel, Cigarettes and tobacco saw above inflation increases.
Other measures were announced to cut taxes for business, while the community sharing received some perks.
Crafters selling own-made goods get an extra £1,000 tax allowance, while people sharing their drives or loft space for rent also pick up an extra £1,000.
The government is also investing in more railways, roads and infrastructure projects in a drive to create jobs.
“This is a Budget that gets investors investing, savers saving, businesses doing business; so that we build for working people a low tax, enterprise Britain; secure at home, strong in the world,” said Osborne.