UK growth to slow, inflation to grow
Published:  23 March, 2011

The Chancellor George Osborne today declared that “Britain was open for business” – despite saying the economy would grow at a slower rate this year.

In his second Budget he unveiled that the economy would grow by 1.7% – down from the 2.1% that was previously forecast. But he said the decline would aid growth in years to come – stating that GDP would reach 2.5% next year, and would then increase to 2.9% by 2013.

Inflation is set to remain between 4% and 5% in 2011, he reported.

Osborne added: “This not a tax-raising budget, but nor can we afford a giveaway. This is a budget built on sound money. It’s a budget for making things – not making things up. Britain has a plan and we are sticking to it.”

Declaring the budget an “urgent call for action”, he announced:

• A 1p cut in fuel duty and the cancellation off the escalator
• The merger of Income Tax and National Insurance
• A review of the 50% top tax rate
• £250m worth of aid to help 10,000 first time buyers – to be funded by the bank levy
• A 2% reduction in corporation tax
• Twenty-four new university technical colleges to be funded
• 40,000 extra apprenticeships for young unemployed people
• An increase in personal allowance to give the consumer £300 or so each year

The Budget followed the revelation that the Bank of England had held the rate of interest at the historic low of 0.5% – despite inflation reaching 4.4% in February – and the institution warning it could rise to 5% in the year.