Britain's Chancellor Alistair Darling unveiled on Monday afternoon a series of measures, including a VAT cut from 17.5 percent to 15 percent for 13 months in his pre-Budget report, to boost the ailing economy.
Along with the VAT cut, which comes into effect on Monday in time for Christmas shopping, Darling said that top rate tax will rise to 45 percent and all National Insurance contributions will go up 0.5 percent from 2011.
And the government would inject an extra 20 billion pounds (30 billion U.S. dollars) into the economy, or 1 percent of GDP, funded in part by an extra 5 billion in efficiency savings and a big increase in government borrowing.
Government borrowing would more than double to 78 billion pounds this year and 118 billion borrowing next year, the Chancellor said.
Darling said it would be "perverse and damaging" to stick to government borrowing rules in the current crisis so they would be temporarily suspended -- but he said the books would be balanced again by 2015/16.
This year's increase in the income tax personal allowance of 120 pounds a year for basic rate taxpayers to be made permanent and increased to 145 pounds in April, helping 22 million basic rate taxpayers -- another 500,000 households not just this year but for good.
Despite all the stimulus policies, Darling adjusted Britain's growth rate to 0.75 percent, down from the 2.5 percent forecast in March -- the biggest ever revision on record.
And the growth forecast for 2009 was revised from 2.75 percent to between minus 0.75 percent and minus 1.25 percent, but would then bounce back in 2010 with positive growth of 1.5 percent to 2 percent.
Darling wants to get consumers spending again and save businesses from going under -- but he must borrow record sums to pay for it.
The 45 percent top rate will not come into effect until after the next general election, meaning Labor will not break its 2005 manifesto commitment on raising income tax.
Source:Xinhua
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