UK Economy
UK growth revised up in Budget 2014; Employment up 459,00 in year
By Finfacts Team
Mar 19, 2014 - 3:49 PM

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George Osborne, UK chancellor, and his Treasury team, in Downing St, London, March 19, 2014

George Osborne, UK chancellor, today delivered his Budget Statement to Parliament, setting out how the government will take further action "to secure the recovery and build a resilient economy." He said the economy is now growing faster than predicted and expectations for growth this year and next have also been revised up by the Office for Budget Responsibility (OBR) – to 2.7% in 2014 and 2.3% in 2015. A record number of people are in work and the OBR now expects employment to reach 31.4m by 2018. A deficit that reached 11% of GDP in 2009-10 is now forecast to fallen by half to 5.5% in the coming year and will be eradicated by 2018-19. Meanwhile, also Wednesday the Office for National Statistics reported that employment was up 105,000 from August to October 2013 and up 459,000 on the year to 30.19m for November 2013 to January 2014.

The increase in UK employment between August to October 2013 and November 2013 to January 2014 was due to more self-employed people; the number of employees fell over this period. Unemployment was down 63,000 from August to October 2013 and down 191,000 on the year to 2.33 million for November 2013 to January 2014.

Osborne said Budget 2014 will help British businesses by:

  • doubling the annual investment allowance to £500,000 until the end of 2015
  • offering the best export finance in Europe
  • reducing energy costs, to ensure that the UK remains a competitive location for manufacturing

Radical measures "to help savers at all stages of their lives and to give people greater freedom over how they access their pension savings" were announced. The Budget "introduces the most fundamental change to the way people access their pensions in almost a century
supports households to save through a package of measures including reforming the ISA into a New ISA (NISA) with a significantly higher annual limit and cutting savings tax."

  • All tax restrictions on pensioners' access to their pension pots to be removed, ending the requirement to buy an annuity
  • Taxable part of pension pot taken as cash on retirement to be charged at normal income tax rate, down from 55%
  • Increase in total pension savings people can take as a lump sum to £30,000
  • New Pensioner Bond, paying "market-leading" rates, available from January to over-65s, with possible rates of 2.8% for one-year bond and 4% for three-year bond - up to £10,000 to be saved in each bond.
The chancellor announced:
  • reduce taxes by increasing the level of the tax-free personal allowance further, from £10,000 to £10,500 in April 2015
  • cut the duty on beer by 1 penny a pint, freeze duty on cider and spirit and abolish the above inflation duty escalator for wine
  • increase the maximum Tax-Free Childcare support available to £2,000 per year for each child
  • help a further 120,000 households purchase a home by extending the Help to Buy: equity loan scheme to March 2020
  • reduce the cost of long haul flights by abolishing the top two bands of Air Passenger Duty
  • provide £140 million of new funding to repair flood defences that have suffered damage in the recent severe flooding, and provide £200 million to establish a potholes challenge fund.

Fuel duty rise planned for September will not happen and a £7bn package to cut energy bills, including £18 per ton cap on carbon price support, is forecast to save medium-sized manufacturers £50,000 and families £15 a year

Help to Buy equity scheme for new-build homes is extended to 2020 and support for building of more than 200,000 new homes was announced.

John Cridland, CBI director-general, said: “The Budget will put wind in the sails of business investment, especially for manufacturers. This was a make or break budget coming at a critical time in the recovery and the Chancellor has focussed his firepower on areas that have the potential to lock in growth.

“The CBI has pushed hard for this significant and much-needed energy package that will help keep manufacturing jobs in the UK, while underpinning vital investment in new energy.

“The doubling and extension of the Annual Investment Allowance, together with making the seed enterprise investment scheme permanent, will be a shot in the arm for many medium-sized businesses.

“On pensions, what’s important is that people on low incomes can make more informed decisions on defined contribution schemes. For many, that will still mean taking advice and buying an annuity, but the increased flexibility will be welcomed. We are pleased that the Government has chosen to consult on the implications of making a similar change to defined benefit pensions as stability for these schemes is essential.

"Changes to the ISA system reflect our call to help rebuild a savings culture."

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