Chancellor sits down at 13.30 – FTSE 100 unchanged at 5,673.26. Sterling is down 0.75 per cent at $1.4920 and the yield on the 10-year gilt is up 3.1 basis points at 3.94 per cent.
Please see www.ft.com/budget for all the news and analysis of the Budget – thanks for joining us.
Changes to pensions mean pensioners will pay tax on the first £10k of income from next year. Higher winter fuel payment for pensioners extended for another year
Winter fuel payments – will guarantee higher winter fuel payments for one more year – at least £250 for pensioners towards winter fuel bills
Will increase child tax credits by £4 a week from 2012 and there will be no restrictions on marital status for the scheme
Robert Shrimsley, editor of FT.com: Here comes another popular crackdown on tax dodging. One can’t object to most of this but this government has been in power for 12 years. Still the tax information agreement with Belize is a glorious swipe at Lord Ashcroft, the Tory deputy chairman. Backed up by a lovely jibe at how the agreement will be signed in the next few days – somewhat quicker than the 10 years it took the Tories to inquire about said peer’s tax affairs.
Child tax credit up £4 a week from 2012
Tax obligations – step up measures to counter avoidance and evasion – should generate £500m each year – will also sign tax information exchange agreements with 3 additional countries, Dominica, Grenada and Belize
Long pause at mention of Belize, cheers and jeers… plus a dig over Lord Ashcroft affair
Measures to clamp down on tax evasion and avoidance are expected to save the country £500m a year
Will provide £270m university fund in 2010/2011 to create 20,000 more university places, primarily in maths, engineering, science and technology
Robert Shrimsley, editor of FT.com: This seems like a pretty long budget – 55 mins so far – especially since he doesn’t really have any money to spend or any significant new taxes to announce. Wonder if anyone’s ever measured the inverse relationship between content and duration.
Jamie Chisholm, FT Global Markets Commentator: Worth noting that although UK gilt yields are stable, US and German yields are 9 and 3 basis points higher respectively. Spread with bunds down to 83 basis points. Is Prudence back?
James Mackintosh, FT comment editor: So last year emergency VAT cut to boost spending. This year extra tax breaks through ISAs and stamp duty to boost saving/property purchase. Make up your mind, Darling.
Jamie Chisholm, FT Global Markets Commentator: Barclays shares dropped back into the red as chancellor started talking about speeding up licensing for new banks. It probably had more to do with a sudden dip in US equity futures, to be honest.
New £35m university enterprise capital fund to help support education spin-offs into the private sector
Computer games sector offered help along the lines of the film industry support scheme
New investment bank to be set up with £2bn of equity for investment in renewable energy projects. Start-up finance to be provided by the sale of the government’s stake in the channel tunnel
Rob Minto, FT interactive editor: If access to high-speed broadband is so essential, why haven’t the fibre-optic cables been laid when the roads are dug up to improve the sewerage system? Where you need broadband, you usually need water…
Will spend £100m on local roads and £285m on motorway network
Matthew Vincent, editor of FT Money: No rise in CGT for now – but the gap between 50 per cent income tax and 18 per cent CGT is unsustainable
Allowance for entrepreneurs relief for CGT to be raised to £2m from £1m. No rise in CGT rates.
Business rates to be cut for 1 year from October for SMEs, annual investment allowance for small businesses doubled to £100,000
Will increase by 15 per cent the proportion of central government contracts which go to small or mid-sized businesses
Government to set up new quango called UK Finance for Growth which will oversee a new £500m fund for investment in new businesses
FSA to speed up licensing process for new banks
New credit adjudication service to be set up
Over next year RBS and Lloyds will provide £94bn in new business loans
Jamie Chisholm, FT Global Markets Commentator: UK housebuiding stocks like the extension on stamp duty for first time buyers. Persimmon up 4.5 per cent.
Asset sales under way. Banks have been appointed to sell student loan book, government is finalising options for the Tote and the Dartford Crossing is on course to be privatised later this year
Robert Shrimsley, editor of FT.com: Great old chestnuts of life. The sale of the Tote – that’s one old nag that’s been turning up to racetracks for some years now but has never troubled the bookies
Chris Cook, FT leader writer: I like the idea that the Treasury noted the difference between the tax on cider and other forms of alcohol, and decided to raise cider duty to level the playing field so as to prevent tax-motivated choice of tipples. The tax privileges of housing and debt, however, aren’t really worth bothering with.
Benefit reforms – housing benefits – from October, most expensive properties across country will be excluded from housing benefit calculations – saving £250m a year by 2014/15
Number of civil servants in London to be reduced by a third
Matthew Vincent, editor of FT Money: Note – the civil servants’ final salary pension benefits will remain in place
After half an hour of the Chancellor’s speech the FTSE 100 is down 4 points or 0.1 per cent at 5,668.63. The yield on the 10-year gilt is up 2 basis points to 3.93 per cent and sterling is down 0.8 per cent against the dollar at $1.4913
Robert Shrimsley, editor of FT.com: The huge tax rise on cider – a vicious assault on teenagers and vagrants.
Next spending review will be toughest for decades
Confirm – will allocate $4bn to fund operations in Afghanistan
Chris Cook, FT leader writer: Darling’s pledge to remove the “bulk of the structural deficit” will be a deliberate choice of words. This was, until recently, the exact choice of words used by the Tories (who’ve drifted a little: they now say they’d cut the “bulk of the current structural deficit”). So despite the extremely different tones of the two parties, there is basically no difference between the Tories and Labour on how deep they would cut. The only concrete real difference we know of is that the Tories insist that we need to start cutting now – but won’t say how hard.
Public spending – will stick to plans for 2.2 per cent increase in real government spending next year
Robert Shrimsley, editor of FT.com: Another stagger is the measures for instant inplementation and those being delayed. The 50 per cent tax rate comes in next month. The National Insurance rise next year after the election. Likewise the fuel duty will come in stages: the 3p increase over the year is staggered so only a third will be in place by polling day.
Tax on tobacco to rise by 1 per cent above inflation this year and by 2 per cent in real terms until 2014
Inheritance tax threshold to be frozen for 4 years
Cider duty will increase by 10 per cent above inflation from Sunday
No further changes to VAT, income tax or national insurance rates
Matthew Vincent, editor of FT Money: Pension tax-relief position gets worse from 2011 when employer contributions become taxable on high-earning employees.
Tax relief on pensions will be restricted from next year but only on those on earnings more than £130,000 per year
Robert Shrimsley, editor of FT.com: Labour is trying to create two camps: the rich – who vote Tory – and everyone else, who doesn’t.
Government net debt will rise from 54 per cent of GDP in 2009/10 to 79 per cent by 2014/15 but will start to fall in following year
Robert Shrimsley, editor of FT.com: There is a clear political divide here. Help for first-time buyers financed by increases in stamp duty for those with large expensive houses. The question, however, is how much the dividing lines can distract from the pain that all will feel.
Fastest deficit reduction plan of any G7 economy
Bulk of structural deficit will be removed by end of next parliament – will fall from 8.4% of GDP in 2009/10 to 2.5 per cent by 2014/15
Defecit to fall from 11.8 per cent in 2009-10 to 5.2 per cent in 2014-15
Jamie Chisholm, FT Global Markets Commentator: Gilts unfazed by borrowing forecast. Yields on 10-years still at 3.92 per cent.
Chancellor says because of higher tax receipts than expected the government will need to borrow £11bn less than earlier forecast this year, at £167bn. 2010/11 borrowing will be £167bn, compared with pre-Budget forecast of £178bn
Spending, including on tax benefits, has been in line with forecasts
Rob Minto, FT Interactive editor: Apparently there is “hard data” on tax revenues. Hope the data isn’t lost by HMRC again
Chancellor keeps inflation target unchanged at 2 per cent
Fuel duty increases to be staged
Growth prospects – Chancellor keeps growth forecast for 2010 at 1 – 1.5 per cent but reduces 2011 forecast to 3-3.5 per cent and keeps forecasts for following years unchanged
Tax-free ISAS have been extraordinarily popular – ISA limit to rise from £7,200 to £10,200 and will increase in line with inflation thereafter
Matthew Vincent, editor of FT Money: Now what constitutes a “first-time buyer”? Expect the spouses of wealthy individuals to try buying second homes tax free
ISA limits to increase in line with inflation
First steps on housing ladder – first time buyers – will double stamp duty limit for first time buyers immeditely (midnight tonight) to £250,000 – housing market has begun slow recovery. Increase in stamp duty on homes over £1m from 4 to 5 per cent.
Here comes the jeers over stamp duty…
Government to continue to extend mortgage guarantee scheme for a further six months
For next two years – no-one under 24 to be unemployed for more than 6 months without being offered a job
Extended support for older workers by reducuing the number of hours older workers need to work to be eligible for benefits
Considering scrapping default retirement age
Robert Shrimsley, editor of FT.com: The underlying political message here is painfully clear. Yes things have been very bad but they would have been a lot worse if it wasn’t for us
Tax credits to be extended for older workers
Claimant count lower than number Labour inherited in 1997. Nearly 4m helped of claimant count in past year alone
Howls from the Conservatives over unemployment, followed by Labour cheers over 1997-present figures
UK unemployment is lower than in the Eurozone or United States
Car scrappage scheme has driven 30 per cent growth in car sales over the last year
Matthew Vincent, editor of FT Money: New free bank accounts will make payment pensions and benefits cheaper – a cost-cutting measure? And the death-knell for post offices?
UK contracted by 6 per cent over the recession
A strong financial services sector at the heart the the UK’s long-term economic health
To combat financial exclusion – up to 1m more people to have access to bank accounts. Chancellor guarantees bank accounts for all and says will combat financial exclusion
Jamie Chisholm, FT Global Markets Commentator: When Mr Darling started speaking the FTSE 100 was 5,663, sterling was $1.4924 and the yield on the benchmark gilt was 3.92 per cent. Only sterling has really changed: now $1.49, though that’s because the dollar is jumping against everything as markets show nerves.
Any new banking reforms must be “internationally co-ordinated”
Robert Shrimsley, editor of FT.com: On the upside the 50 per cent bank bonus tax has raised £2bn more than expected. On the downside that means more high bonuses were paid and it failed to prevent this behaviour.
More countries now agree on need for international systemic tax on banks
Chancellor calls for new rules on banks’ capital and liquidity from G20 countries by the end of the year
Tax on bank bonuses raises £2bn, four times original forecast of £500m
Already recieved over £8bn in charges and fees in return for supporting banks
Matthew Vincent, editor of FT Money: There a hint that we might see another mini-privatisation frenzy. Sid might be back…
Government will sell shares in RBS and Lloyds as well as Northern Rock
Robert Shrimsley, editor of FT.com: There’s some splendid colour co-ordination on Labour’s front bench. This year’s budget colour would seem to be purple.
A quick history lesson: Northern Rock, how the credit crisis started…
Prospects for global economy much more positive than a year ago – but bank credit, while improved, remains weak in many parts of the world
At the heart of the 2010 budget is a £2.5bn package for small businesses – one-off package
Stick to plan to halve deficit in four years
Borrowing is lower than was forecast last year
Recovery is in its “infancy”
As the chancellor stands up at 12.32, FTSE 100 is down 11 points at 5,662.6. The pound is down 0.8 per cent against the dollar at $1.4922 and the yield on the 10-year gilt is flat at 3.92 per cent.
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Authors: Gordon Smith, Samantha Pearson and Chris Flood, with Rob Minto editing
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