The three things commentators were expecting from yesterday's 2005 Pre-Budget Report by Chancellor Gordon Brown were a downgrade in official growth forecasts, tax increases, and higher borrowing. They were not to be disappointed.
Mr Brown acknowledged it had been his "toughest and most challenging year" as he halved UK growth forecasts for 2005 from 3.5% down to 1.75%, bringing them into line with the private sector consensus. He also lowered his 2006 growth forecast by half a percentage point, and increased borrowing from the £31.9bn he predicted in March to £37bn.
On the revenue side, the Chancellor doubled the windfall tax on oil companies from 10% to 20%, hoping to raise an extra £2bn a year in taxation. He also withdrew the recently introduced tax breaks on residential property directly held in self-invested personal pension (Sipps). Indirect investment in residential property will still gain tax relief. Though income tax rates were unchanged, the income tax thresholds for 2006/07 were increased in line with prices not earnings, so 'bracket creep' will also add to Treasury coffers. There was also an attempt to simplify the rather complex tax credits system, and an overhaul of company R&D tax breaks.
On the spending side, no swingeing cuts just yet - but a tighter rein on public spending should see it decline as a percentage of GDP, while Treasury is predicting revenue to rise to 40.7% by 2009 from 39.4% in the current fiscal year. The 2007 Comprehensive Spending Review should see more dramatic cutbacks.
Adding to spending will be another £580 million to meet the cost of the UK's "international commitments" (Iraq, mainly). Deputy PM John Prescott moved to dampen the effect of council tax rises by offering an estimated £1.1bn extra cash.
There is of course plenty of news and commentary in today's newspapers. The Financial Times, The Times and The Guardian have special sections. Here's a selection of the, mostly critical, commentary:
* Martin Wolf writes in the Financial Times that Gordon Brown "is on thinning ice": The chancellor risks tarnishing a golden legacy
* The Telegraph's Ambrose Evans-Pritchard thinks the Past is catching up with the Great Meddler
* David Walker in the Guardian warns that Brown's largesse is landmine for the Tories
* Philip Stephens is of like mind. Writing in the Financial Times that while the Chancellor "exudes insouciance", he argues the Pre-Budget Report is Brown’s largesse to Cameron
* The Times' Anatole Kaletsky argues that Brown has locked himself into austere future that will baffle friend and foe
* Polly Toynbee tells Guardian readers that if these figures are as bad as it gets, the Tories will only make headway if Labour destroys itself during Blair's long exit: Tax and spend is popular - and that's where the fight is
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