The Chancellor’s Pre-Budget Report statement indicates the likely direction of the next Budget. Alistair Darling’s 2009 report takes on added significance in light of the economic crisis and the upcoming general election.
This document summarises the main points of the Pre-Budget Report as they relate to ACE member companies. While there are some positive announcements, particularly relating to sustainable development and investment in small businesses, firm details are yet to be announced.
ACE will continue to monitor the outcomes of the Pre-Budget Report, particularly in the run-up to the next Budget.
Outlook for the economy
- The UK economy is expected to have contracted by 4.75 per cent in 2009, albeit returning to growth in the fourth quarter.
- The Chancellor forecasts growth of between and 1.5 per cent in 2010, rising to 3.5 per cent in 2011 and 2012. This growth is likely to come from more varied sources, and would not depend as heavily on the financial sector.
- Inflation (CPI) is expected to reach around 3 per cent in early 2010, before falling back.
- Tax revenues will take time to recover.
- The overall impact of the bank rescue on the public finances has been revised down from £50bn to around £10bn.
- Borrowing is set to fall to £176bn (12 per cent of GDP) in 2010, and reach £82bn by 2014-15 (4.4 per cent of GDP).