15:53 06 December 2012
Chancellor George Osborne made his announcement on Wednesday on the state of the UK economy in his Autumn Statement, and it wasn’t received well by all. With reference to benefits being capped as well as growth predictions being cut, there are austerity plans that will stretch until 2018.
The Chancellor admitted that the austerity measures would last for at least a further six years, with the government agreeing on an extra £10billion of spending cuts by summer 2013.
Mr. Osborne also stated he would not be able to meet his target of reducing the countries debt problem in relation to the share of national income, in the next three years.
The Fitch Agency has claimed that with the recent statement, the credit rating for the UK – its AAA – could be threatened. This is thought to be because the government could fail to meet its debt reduction target.
In the eyes of potential lenders, the UK could therefore be deemed as a risky borrower if its credit rating slumps.
With Mr. Osborne admitting that the UK economy was underperforming compared to expectations, came the news that many working-age benefits will increase by 1per cent. This is for the next three years, and would include Jobseekers Allowance and Child Benefits.
The Autumn Statement also nodded at the concept that around 400,000 Britons are expecting to be included in the 40p higher income tax bracket. This is thought to occur by 2015 and would take the figure to 4.2million.
Based on reports, this group of people could become £117 worse off annually.
Although the Chancellor agreed that it was taking longer than expected to shrink the deficit, he said that “Britain is on the right track.”
Some members from the Labour Party pointed out that a working family with children on £20,000 annually could lose £279 a year as of April 2013. But the Treasury reportedly dismissed this claim.
Although, it wasn’t all bad news. Drivers will be pleased to know plans for a 3p per litre increase for petrol, which was due to take effect from the onset of 2013, were axed.
Also, the sum of money that people can earn before paying income tax is expected to increase to £9,440. In the business world, corporation tax will be cut to 21per cent next year.
With the spending review being completed in the first six months of 2013, bodies such as the Home Office, the Ministry of Defence (MOD) and the Ministry of Justice (MOJ) among others, are bracing themselves for the next budget squeeze.
The Autumn Statement is one of two statements where the Chancellor puts forward information to Parliament every year.
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