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Daily Mail City Finance
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George Osborne’s hand is likely to be strengthened when he delivers his Budget speech on Wednesday after an influential report lifted the economy’s growth forecast.
The Office for Budget Responsibility is expected to revise its 2014 figures from 2.4 per cent to around 2.7 per cent, according to an EY ITEM Club Budget report.
But it says the Chancellor is without a war chest, leaving him no room for major giveaways.
No giveaways: The Chancellor will be bouyed by fresh economic forecasts that see Britain growing by 2.7 per cent this year but he will still have no room for a pre-election giveaway
The ITEM Club added its forecast, based on unchanged policy, pointed to the government achieving a modest surplus of £5billion by 2019 – around £3billionn higher than the OBR’s December forecast.
Despite the lack of wriggle room, the report predicts there will be announcements on personal tax, housing and rebalancing the economy towards exports.
Several Budget announcements were heavily trailed at the weekend and among those either confirmed by the Chancellor or reported as probable were:
EY economist Andrew Goodwin said: ‘Though we expect a better forecast, the revisions will be relatively small change in terms of public finances. If the Chancellor wants the OBR to continue to project a budget surplus by the end of the forecast horizon, he will have very little room for extravagance.’
The EY report suggested the Chancellor could take bolder action on housing by increasing public borrowing to help fund a programme of house building although it conceded this was likely to be a long shot at best.
It added a more wide-ranging reform of the stamp duty system would be desirable, particularly to remove the ‘cliff edges’ at the various thresholds such as the 3 per cent tax threshold for house purchases above £250,000.
But again it said such reforms did “not appear to be on the Chancellor’s radar at present.”
Mr Osborne said the development of Ebbsfleet – on the high speed rail link to the Channel Tunnel – would build on the example of developments such as Letchworth, Welwyn Garden City and Milton Keynes.
Yesterday he also claimed extending the Help to Buy scheme to 2020 would lead to more than 120,000 new homes to be built.
The list of announcements came as disgruntled Tory back benchers revealed the Mr Osborne believed ordinary voters ‘liked’ paying tax at the 40 per cent threshold because it made them feel like they were a success.
At a meeting of the 1922 Committee of backbench Tory MPs in February the Chancellor was reported to have said: ‘If they are paying 40p tax they have a greater interest in cutting Government spending because they are paying for it. All the polling evidence suggests I am right.’
Several prominent Conservatives including two former chancellors have called on Mr Osborne to raise the threshold at which people begin to pay 40 per cent income tax from £41,500 to around £44,000.
They point out that when the tax band was introduced in 1988 only one in 20 people were required to pay the tax. Now one is six people pay income tax at 40 per cent.
Comments (32)
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Mad Dog,
Great Britain, United Kingdom,
33 minutes ago
No doubt drivers, smokers and drinkers will end up funding the budget yet again.
frankie mcgill,
manchester,
1 hour ago
¿I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money… I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with the Congress for sitting idly by and permitting such an idiotic system to continue.¿ Wright Patman….”The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government¿s greatest creative opportunity.¿ Abraham Lincoln. George and Co havent got the bottle to take on the BoE so will knock a penny off a pint and hope the masses dont wake up!
timster,
hinckley,
2 hours ago
Budget boredom. 1p off here. 2p on this. Pension up in 2065. Higher tax on anyone earning 78 billion A year. Its all rubbish and we swallow it. From mr gullible
Steve,
Glasgow, United Kingdom,
2 hours ago
Increase base rate and make the ones who borrowed more than they could afford in order to stoke up house prices pay for there actions.
Also increasing base rate will raise income for the government.
LR,
Liverpool,
1 hour ago
micsey,
wirral,
2 hours ago
stop all overseas aid today!!!!!!!!!
LR,
Liverpool,
1 hour ago
deborah,
manchester, United Kingdom,
4 hours ago
is he barking ???
deborah,
manchester, United Kingdom,
4 hours ago
Is the guy simple people like paying 40 percent ………
phila9,
bradford,
7 hours ago
Any give away is a phoney ploy by the Conservative party to be re-elected….there is NO money to give away….this year or next year. Any give away will be totally irresponsible…but I suppose Cameron and Osborne will need a job after May 2015 so will do anything to get elected!!!
LR,
Liverpool,
1 hour ago
myopic101,
Warrington,
8 hours ago
Cut the debt mountain. Whatever it takes. Of course its not going to be popular.
LR,
Liverpool,
1 hour ago
frankie mcgill,
manchester,
1 hour ago
GOOD4NOTHINGEU,
Planet Cameron Vote UKIP, United Kingdom,
10 hours ago
Osborne + spreadsheets = FAILURE
LR,
Liverpool,
1 hour ago
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Budget 2014: OBR set to raise UK growth forecast to 2.7%
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