Budget 2009 beckons
By politics.co.uk staff
Chancellor Alistair Darling is preparing to deliver the Budget for 2009.
Fevered speculation has preceded the announcement, which will be made today after prime minister’s questions.
Mr Darling has precious little room to manoeuvre, however, with the nation drastically in debt, and a future general election making tax hikes extremely unlikely.
In a separate development, the International Monetary Fund (IMF) admitted making a mistake in its claim that the UK would have to pay £200 billion for bailing out its banks.
The organisation’s Global Financial Stability Report had included the figure – expected to be more like £60bn – in error.
“The Budget will make a prudent provision for potential losses from banking interventions in line with our cautious approach to forecasting the public finances,” a Treasury spokesman said.
An Ipsos Mori poll released yesterday showed that on balance, most respondents would prefer to see taxes rise than public services cut.
Fifty-three per cent opted for the former while 35 per cent went for the latter.
The poll hinted at a gradual worsening of the economic climate in people’s daily lives, with almost two-thirds (62 per cent) now knowing someone who has been made redundant.
Analysts are expecting a drastic reversal of the Treasury’s previous economic predictions.
Pre-Budget Report estimates of a 0.75 to 1.25 per cent contraction of gross domestic product in 2009 will have to be redrawn to around 3.5 per cent.
Plummeting tax revenue will also force a revision of public sector borrowing forecasts. It is expected to rise to a post-war record of around £170 billion.
Reports out yesterday also suggest the Budget will focus on rejuvenating the housing market.
Today’s Budget is the first since the recession began, although it has been somewhat overshadowed by the Pre-Budget report and the G20 summit earlier this month.
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