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Autumn statement: Osborne to announce £21.5bn in savings

by: Investment Week and Mortgage Solutions
  • 29/11/2011
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Autumn statement: Osborne to announce £21.5bn in savings
Chancellor George Osborne is expected to claim today he has saved the taxpayer £21.5bn in debt interest payments.

In his Autumn Statement, the new pre-budget report at 12.30pm, Osborne will argue his deficit reduction plan has kept yields on gilts at record lows, reported City AM.

At the end of last week, the gilt yield had fallen to 2.3% which equates to an implied saving of £21.5bn by 2015-16.

However, this number will change if the OBR adjusts its forecasts for growth or public finances as is widely expected, according to City AM.

The chancellor is expected to confirm today UK growth will be lower and borrowing much higher than planned.

In the Budget in March, the OBR cut its growth forecast for 2011 to 1.7% and its 2012 forecast to 2.5%. However, both are exp[ected to be reduced again to around 1%.

Borrowing, which had been forecast to be £37bn in 2014-15 – is now widely predicted to more than double to £81bn.

The government has pledged to eliminate the UK’s structural budget deficit over five years and at the time of the Budget it was on course to do this by 2014-15.

Much of the government’s housing and mortgage related strategy was announced last Monday in the housing strategy.

Policies announced last Monday included a new £400m Mortgage Indemnity Guarantee scheme intended to support 100,000 buyers. This follows the First Buy scheme already announced in the 2011 budget to help 100,000 first-time buyers. Osborne also announced £400m for house builders to restart lapsed construction programmes, targeting 16,000 new homes.

For analysis from top bloggers on the housing strategy, click here

The Chancellor announced £1.8bn for affordable housing providers, cut red tape from the planning laws and an extension of the Right To Buy scheme for council tenants.

In the autumn statement, Osborne is expected to unveil a £300m package of tax breaks to promote investment in small business and enterprise investment for business start-ups. The government will offer 50% income tax relief on investments of up to £100,000, with each firm eligible for £150,00 in total.

An extra £380m has also been found to extend free childcare to disdvantaged two-year olds, giving them 15 hours of free education and care a week.

Other policy changes covering youth employment schemes and infrastructure investment have already been unveiled.

However, yesterday the OECD warned the UK was likely to slip back into recession.

The economic think tank predicted a 0.03% contraction in the UK economy this quarter, and a further 0.15% the next.

Bank of England governor Sir Mervyn King also warned MPs growth would be flat for the next six months as the eurozone crisis threatens the UK’s recovery.

For full coverage of the autumn statement from 12.30, drop into Mortgage Solutions throughout the day.

 

 

 

 

 

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