Budget 2013: Osborne slashes growth forecast

Updated: 



Budget 2013: What it means for you

The Chancellor has slashed the official growth forecast in half as he admitted the recovery was taking "longer than anyone hoped".

George Osborne said the economy would grow by just 0.6% this year - down from the previous forecast of 1.2% - and would be slower than forecast next year at 1.8% compared to the 2% forecast at the time of the Autumn Statement.

He described the package as a "Budget for people who aspire to work hard and get on". But he added: "Today, I'm going to level with people about the difficult economic circumstances we still face and the hard decisions required to deal with them."

Among the measures revealed included a new mortgage guarantee, sufficient to support £130 billion worth of loans, to help people who cannot afford a big deposit.

September's planned fuel duty rise has been scrapped, the Chancellor said, while a planned 3p rise in beer duty tax scrapped and replaced by a 1p cut in duty on a pint of beer. The beer duty escalator has been scrapped, but planned rises for all other alcohol duties maintained.

The rise in personal allowance has been brought forward to 2014, meaning no income tax will be paid on the first £10,000 of earnings.

Public sector net debt will be 75.9% of GDP this year then 79.2%, 82.6%, 85.1%, 85.6% in following years before falling to 84.8% in 2017/18, Mr Osborne added. And he told MPs that the proportion of national income spent by the state has fallen from 47.4% three years ago to 43.6%, and is on course to reach 40.5% by the end of the period. The Military are to receive full recommended increase in "X-Factor" payment in May and to be exempted from changes to progression pay.

The sluggish growth figures mean borrowing will be higher than expected - hitting £114 billion this year compared to a previous forecast of £108 billion. Next year borrowing will be £108 billion as against the £99 billion previously predicted, before dropping down to £42 billion in 2017-18 compared to £31 billion forecast in the Autumn Statement. But the Chancellor predicted the deficit would continue to come down thanks to the "many tough decisions" taken by the Government.

Tax free child care vouchers worth £1,200 per child and increased support for families with children on universal credit. The Flat rate pension worth £144 a week will be brought forward to 2016.

On energy, the Chancellor announced a boost for the controversial shale gas industry, which collects gas using a process known as fracking. Mr Osborne said the "generous new tax regime" would include a shale gas field allowance. He said: "Shale gas is part of the future. And we will make it happen."

Budget 2013: Winners and Losers

Budget 2013: Winners and Losers

SPONSORED FINANCIAL CONTENT