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UK recession 'worse than thought' | |
(21 minutes later) | |
Chancellor Alistair Darling has said the UK recession was worse than he predicted but will start to grow again at the start of 2010. | |
He told MPs the economy would shrink by 4.75% in 2009 compared with his Budget estimate in April of 3.5%. | |
And the public finances were also deeper in the red with a deficit of £178bn this year compared with the £175bn he had predicted. | |
He has also unveiled a bank bonus tax and changes to National Insurance. | |
He said the government wanted to promote growth without "putting the recovery at risk". | He said the government wanted to promote growth without "putting the recovery at risk". |
KEY POINTS SO FAR Economy to shrink by worse than expected 4.75% this yearNew 50% tax on banker bonusesHousehold boiler scrappage scheme1p rise in corporation tax for small firms scrappedTax rebates for electric cars and wind turbinesBingo duty falls from 22% to 20%State pension to rise by 2.5% next yearMore help for young unemployed class="" href="/2/hi/business/8395966.stm">Economic challenges for the parties class="" href="/2/hi/uk_news/politics/8403127.stm">LIVE: In text and video | |
Mr Darling has been under pressure to show how Labour would halve the UK's budget deficit in four years. | |
He claimed government action to pump money into the economy had made a "real difference" to families and businesses. VAT will return to 17.5% on January 1 as planned, with no other changes in VAT, the chancellor confirmed. | |
He said unemployment in the UK would keep rising for some time but said promoting employment remained a top priority for the government. | |
From next month, no-one under 24 needs to be unemployed for longer than six months - down from the current 12 months - before being guaranteed work or training. | |
GUIDE TO PRE-BUDGET REPORT Each year the chancellor delivers two reports to MPs, updating them on the state of the economy and planned fiscal changes. | GUIDE TO PRE-BUDGET REPORT Each year the chancellor delivers two reports to MPs, updating them on the state of the economy and planned fiscal changes. |
The pre-Budget report (PBR) takes place in the autumn with the Budget each spring. | The pre-Budget report (PBR) takes place in the autumn with the Budget each spring. |
This year's PBR will be Mr Darling's third since he became chancellor in June 2007 and, with an election imminent, his most important. | This year's PBR will be Mr Darling's third since he became chancellor in June 2007 and, with an election imminent, his most important. |
You can watch BBC TWO's pre-Budget report special - together with text commentary and expert analysis and reaction on the BBC website from 1130 to 1430 GMT | You can watch BBC TWO's pre-Budget report special - together with text commentary and expert analysis and reaction on the BBC website from 1130 to 1430 GMT |
Nick Robinson's view Send us your comments | Nick Robinson's view Send us your comments |
Mr Darling also unveiled guarantees of a training or education place for every 16 and 17-year-old to be available to school-leavers again in September 2010. | |
He also announced that a 1p increase in Corporation Tax for smaller companies is to be deferred, leaving the 2010 tax rate unchanged. | |
The minimum number of hours those over 65 need to work to receive Working Tax Credit is also to be reduced. | |
The basic state pension will rise by 2.5% in April, a real-terms increase of nearly 4%. From next year's Budget, Bingo Duty to be cut from 22% to 20%. | |
Mr Darling is not expected to set out detailed spending plans for the years after 2010-11 but he may single out areas in England, such as schools, hospitals and police to be "ring-fenced" from future cuts as the battlelines are drawn for next year's general election. | Mr Darling is not expected to set out detailed spending plans for the years after 2010-11 but he may single out areas in England, such as schools, hospitals and police to be "ring-fenced" from future cuts as the battlelines are drawn for next year's general election. |
The tax rate for the bank on that pool of bonuses would be more than 50% Robert Peston, BBC Business Editor Peston: How tax will work | The tax rate for the bank on that pool of bonuses would be more than 50% Robert Peston, BBC Business Editor Peston: How tax will work |
A number of new green initiatives are expected in the report, with tax rebates for electric cars and wind turbines. | |
Mr Darling announceda boiler scrappage scheme along the lines of the car scrappage scheme. | |
The chancellor's statement sets the tone for the economic debate in the run-up to the election - which must be held by next June. | The chancellor's statement sets the tone for the economic debate in the run-up to the election - which must be held by next June. |
The Lib Dems argue neither of the main parties are being honest about the spending challenges facing the next government and the extent of cuts that will be needed. | The Lib Dems argue neither of the main parties are being honest about the spending challenges facing the next government and the extent of cuts that will be needed. |