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The economic growth forecast for 2011 has been revised down to 0.9% from 1.7%. The 2012 forecast has been revised down to 0.7% from 2.5%. Growth will not return to the historic trend of around 3% until 2015.
Although these figures represent a significant revision downwards, the UK is not forecast to head back into recession as some had predicted.
Borrowing to rise by an extra £111bn over the next 5 years, according to forecasts from the Office of Budget Responsibility. The debt-to-GDP ratio will peak at 78% in 2014 to 2015 (significantly higher than forecast) and is predicted to be falling by the end of the Parliament.
From April 2012, start-up investments that qualify for the Enterprise Investment Scheme (EIS) will receive 50% income tax relief regardless of the rate at which the individual pays income tax. In addition, these schemes will offer a capital gains tax exemption on gains realised in 2012–13 and then invested through SEIS in the same year. A significant tax break for those comfortable with the risk associated with such schemes.
Up to £20bn of guarantees for bank funding will be made available over two years. This will allow banks to offer lower cost lending to smaller businesses (under £50m turnover), subject to state aid approval. It is hoped that the scheme will have the effect of reducing the rate of interest that companies pay by 1% by taking advantage of the preferential rates that the UK government can borrow at.
In addition, the government will also make available an initial £1bn through a Business Finance Partnership, which will invest in smaller and mid-sized businesses in the UK through non-bank channels.
Basic state pension to rise by £5.30 next year to £107.45 per week. The state pension age will be increased from 66 to 67 in 2026. If you don't fancy working until you're 67 only to receive £107.45 per week, you might want to read these two articles:
Plans were announced to extend the current small business rate relief holiday for a further six months from 1 October 2012. The Government will also give businesses the opportunity to defer 60 per cent of the increase in their 2012-13 business rate bills as a result of the RPI uprating, to be repaid equally across the following two years.
The Government will seek views on the introduction of compensated no-fault dismissal for micro-businesses with fewer than 10 employees. In addition, the Government will look at how it could move to a simpler, quicker and clearer dismissal process whilst also looking at ways to provide a quicker and cheaper alternative to a tribunal hearing in simple cases — a ‘Rapid Resolution’ scheme is being considered.
Planned 3p fuel duty rise in January to be scrapped, although duty will go up by 3p in August 2012. The average rise in regulated rail fares to be capped at 6% (1% above inflation) in January 2012, rather than the 8% cap expected.