British Chancellor Alastair Darling has announced plans for one-off £2.5 billion growth package to boost the UK economy, but said he would stick to his plan to reduce the country's budget deficit.
In his budget speech, he told MPs UK unemployment had not risen as much as feared and borrowing was lower than forecast last year. The Chancellor said the task now was to bring down borrowing in a way which does not damage the recovery.
He said he expected the UK economy to grow by between 1% and 1.5% this year. The Chancellor said tax receipts this year had been better than expected, and as a result borrowing in the financial year to April would be £167 billion, £11 billion lower than his pre-budget forecast.
This represents 11.8% of economic output. Mr Darling said he still planned to halve the deficit as a percentage of GDP over a four-year period.
Mr Darling said the tax he introduced last year on bank bonuses had so far raised £2 billion, twice as much as forecast. But he said more countries now agree on the need for an international systemic tax on banks.
The British Chancellor said that over the next year, RBS and Lloyds - in which the British government has substantial stakes - would provide a total of £94 billion of new business loans, nearly half to smaller firms. He also said the UK's Financial Services Authority would improve and speed up the licensing process for new banks to boost competition.
Mr Darling said a stamp duty limit for UK first-time home buyers will be doubled from midnight tonight to £250,000 for this year and next, to be funded through an increase in stamp duty to 5% for houses worth over £1m from April.
He also announced that duty on cider will increase by 10% above inflation from midnight on Sunday.
The Budget will bring in additional tax of £0.5 billion each year, said Mr Darling.
Moody's says stable outlook remains solid
Britain's 'AAA' sovereign credit rating and stable outlook remain solid following a Budget that suggests the country's efforts to rein in its high deficit will not flag following upcoming elections, credit rating agency Moody's said this evening.
The content of finance minister Alistair Darling's final budget ahead of an election expected in May 'suggests that the considerable fiscal challenge faced by the government has not changed materially,' Arnaud Mares, Senior Vice President at Moody's Sovereign Risk Group, said today.
It also offered no evidence of 'a reduction in any future government's capacity to rise to the challenge (of cutting the deficit) in coming years,' he added.
