British Finance Minister George Osborne delivered the UK’s Budget for 2013 on Wednesday. The nation's economy growth forecast has been downgraded to 0.6% from 1.2%, a figure predicted just four months ago.
Despite the slash in expected economic growth, Chancellor
Osborne vowed to stick the course on austerity. "It is taking
longer than anyone hoped, but we must hold to the right track,"
he said.
The prospects for reducing national debt aren't looking rosy
either, with Osborne forecasting it will rise to 85% of GDP and not
start decreasing until 2017-2018, two years later than previously
predicted.
But hopes for a better future are still high. Osborne said that
although it was taking longer than expected "we are, slowly but
surely, fixing our country's economic problems". "If you want to
work hard and get on; we are on your side," said the
chancellor, adding it was a Budget "for an aspiration nation".
The package of measures presented by Osborne also includes a cut in
corporation tax to 20% and the introduction of a new threshold for
income tax, which will stand at £10,000 by year 2014. The latter
became available by squeezing public spending. Some measures to
boost the housing market have also been revealed. The
government will now offer an interest-free loan worth 20% of the
value of a new-build house starting next year. With the hope of
stimulating small business in the country, Osborne's budget offers
a £2,000 allowance before paying employer National Insurance
contributions, in what is described as taking "tax off jobs".
But Osborne’s approach has clearly proved that one can’t dig its
way out of a hole by digging downwards, says Salman Shaheen, editor
at International Tax Review magazine.
"I think austerity has failed and now you really need to be
spending money, injecting it into the economy, investing in housing
projects, infrastructure, roads, schools, these are urgent tasks
now. I think we need to create jobs in the economy, we need to
create houses, and we need to stimulate investment," Mr Shaheen
told RT.
"I suspect we’ll hear quite a lot about tax evasion in this
budget. It’s been a news agenda lately and the chancellor can’t
afford to ignore that. We are going to hear some talk of the
general anti-abuse rule. I feel like it may well be lip service,
because this general anti-abuse rule is not going to catch the
headline grabbing schemes that we’ve all heard about with Google,
Amazon and Starbucks. So I think the chancellor is going to have to
go a lot further if he wants to address the problem of corporate
tax avoidance."