The Budget 2009

Wednesday, 22nd April 2009 12:16 - by Didedo

The Chancellor of the Exchequer, Alistair Darling, is scheduled to make his Budget statement to the House of Commons at 12:30 on Wednesday 22nd April. This will be his second budget and his last ‘full’ budget before the next election. Well, the figures will be out: Rising unemployment? The forecasts for economic growth revised? Deficits which could amount to more than the predicted 8% of GDP? On the positive side there is increasing interest in the housing market, positive signs that the markets are picking up in some sectors, particularly Mining and Banking. Some say that the UK is now better placed in this recession than Europe or even America. It seems that the Chancellor will be walking a very fine line between engendering confidence in the stockmarket and keeping the electorate ‘on side’. It has already been announced that there will be a 45p tax rate on those earning £150,000 or more, plus higher National Insurance Contributions and cuts in personal allowances for high earners (with possibly more increases in 2011). The Opposition, on the other hand, want to see the Public Sector delivering better value and, in the words of George Osborne, to see us “move away from a model of spending and borrowing to saving and investing”. So, what else is being bandied about apart from tax increases and reductions in public spending? Green issues seem to be of far greater import, including renewable energy (I did see that power companies were lobbying for tax breaks, for combined heat and power plants, to be extended beyond 2012), grants to make homes more efficient, and of course there is the £2,000 incentive to scrap your old car (10 years plus?) to buy a newer, and therefore more fuel efficient, vehicle (See lse.co.uk Personal Finance Blogs too). Our American buddies made green issues one of their ‘mainstays’ and I’m sure it will be a prominent fiscal and economic feature in this Budget. Credit insurance for companies has also been mooted, as some insurers have not been prepared to offer this product in the current climate, and VAT has re-surfaced as an issue - I still recall my local Stationers working all night to change prices last year. Issues more directly related to the markets and my fellow investors could be changes to ISA limits, possible tax ‘holidays’ on savings income for some, and I even saw mention of a land tax (sorry fjp73). Post-G20, the markets rallied. What do you see happening next? If the information on Wednesday doesn’t contain too many shocks, will we see a continued recovery i.e. the markets already have the information factored in? Or could the release of figures drive us toward new lows? Either way, I wouldn’t want to be The Chancellor on Tuesday night! Best wishes all.