With an election on the cards this May, Alistair Darling, the British Chancellor, has tried to draw up a budget designed to simultaneously cut the government’s deficit and stimulate economic growth. The British Finance Minister aims to cut the deficit from 11.8% this year to 4% in 2014. He bases this on growth of 1 to 1.5% this year rising to 3 to 3.5% per year from 2011.
Reducing the British deficit is key for investors who fear that credit rating agencies might down-grade the British debt. The British debt should rise from 54% of GDP this year to 75% in 2014. But with unemployment running at 7.8% creating jobs remains a priority.
This is one of the results of 18 months of recession during which the UK economy contracted by 6%. One of the measures aimed at supporting a still-fragile recovery is the suspension of stamp duty for first time buyers of property worth less than the equivalent of 279,000 euros.
The budget also sets out plans for a green bank worth 2.3 billion euros to support low-carbon emmiting industries, and 2.8 billion euros are set aside for small businesses to encourage innovation and improve financial performance.
A further measure spotlights the Royal Bank of Scotland et Lloyds, which will get 105 billion euros for lending to small businesses. There will also be help for up to a million people on low incomes who have been refused banking facilities by the high street banks.