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20 Mar, 2013 17:59

UK growth halved as budget 'for an aspiration nation' unveiled

UK growth halved as budget 'for an aspiration nation' unveiled

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."