Forecasts for growth in the British economy over the next four years were downgraded Wednesday, announced by Britain's Chancellor George Osborne in budget.
Osborne said that revisions to growth forecasts since his autumn statement in November meant that growth in the economy this year was now expected to be 2 percent instead of 2.4 percent. Besides, growth forecasts were downgraded to 2.2 percent in 2017 (2.5 percent forecast in November) and 2.1 percent in each year after that. Previous forecasts for 2018 stood at 2.4 percent and 2.3 percent for 2019 and 2020).
He also warned against voting to leave the European Union (EU) in the June 23 referendum. Osborne said the UK would be "safer, stronger and more secure" if it remained in the EU, quoting the ' Economic and Fiscal Outlook' report published Wednesday afternoon by independent government statistics body the Office of Budget Responsibility (OBR).
Osborne has given himself two fiscal targets in his handling of revenue and finances to reach over the period of this parliament. In the Budget last summer, he set the target of government public sector spending being in surplus by 2019/20, and this Budget will see spending in surplus by 10.4 billion pounds then.
But his second target, of reducing the ratio of debt to GDP in each of the next five years will not be met, with upward revisions to the November figures in each of the next five years, hitting a height of 82.6 percent in 2016/17.
Annual government borrowing requirements will continue to fall, with 2015/16 forecast to be 1.3 billion pounds lower at 72.2 billion pounds than forecast in the November autumn statement. Borrowing forecasts set then have now been revised to 55.5 billion pounds for 2016/17, up 5.6 billion pounds, with greater increases in 2017/18 (up 14 billion to 38.8 billion pounds), and in 2018/1 to 21.4 billion ( up 16.8 billion pounds).
Osborne said: "Financial markets are turbulent. Productivity growth across the west is too low. And the outlook for the global economy is weak. It makes for a dangerous cocktail of risks. But one that Britain is well prepared to handle, if we act now so we don't pay later."
Osborne implemented a series of measures to stimulate spending, and to help businesses, beginning with an increase in personal income tax allowances for all taxpayers, raising the floor at which taxation starts to 11,500 pounds from 10,600 pounds. Corporation tax, currently at 20 percent, will be cut to 17 percent by 2020, and the main rate of corporation tax will be reduced to from 28 percent to 20 percent.
The North Sea oil industry has been hit by the large fall in oil prices, and Osborne moved to support the oil industry with a series of tax relief measures: the supplementary charge for oil and gas producers is halved to 10 percent, and the abolition of the petroleum revenue tax. The Annual threshold for full relief on business rates for small firms was raised by Osborne from 6,000 pounds to 12,000 pounds and its higher rate from 18,000 pounds to 51,000 pounds, freeing 600,000 firms from paying the tax.
One of the most innovative tax moves was to set a levy on sugary drinks, rated by volume which could raise increase prices by up to 20 percent and bring in 520 million pounds in revenue. Osborne said: "One of the biggest contributors to childhood obesity is sugary drinks. A can of cola typically has nine teaspoons of sugar in it."
Osborne froze tax on beer, cider and spirits like whisky but he increased it in line with inflation on wine, which accounts for 36 percent of alcohol sales in the UK.
Also, for the sixth year running, he froze any tax increase on gasoline tax.
He also announced a boost to infrastructure spending, supporting development of an improved north-south London rail line, Crossrail 2, and the creation of a high speed train network, HS3, in the north of England.
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