Key Points from the Budget 2010

Chancellor Alistair Darling’s 2010 Budget Report

Today Chancellor Alistair Darling delivered the new budget plans, ahead of the nearing election; key points include:

Housing

  • Stamp duty scrapped for homes below £250,000 for first time buyers, compensated by a 5% increased stamp duty on residential property sales over £1m from April 2011

Taxes

  • No changes to VAT or income tax planned
  • Inheritance tax threshold frozen for four years
  • Crack down on tax avoidance is expected to raise £500m
  • £4 rise in child tax credit for parents with young children from 2012

Fuel, cigarettes and alcohol

  • Tobacco duty up by 1% from Sunday and by 2% each year until 2014
  • Wine, beer and spirit duties to rise by 2% from midnight on Sunday
  • Cider duty to rise by 10% above inflation on ’super-strength ciders’ from midnight on Sunday
  • 3p fuel duty increase will be staged; it will rise by 1p in April, a further 1p in October followed by a further 1p rise in January next year.

Economy

  • Darling predicted a growth of 1% to 1.25% in 2010, in line with previous forecasts
  • Borrowing this year is forecast to be £167bn - £11bn lower than predicted in December

The chancellor notably held back from initiating significant spending cuts in this year’s budget, insisting that the economy remained too ‘weak’ and ‘fragile’ to begin the process.

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Slow Economic Recovery Into 2011

CBI warns of sluggish economy until mid 2011

Confederation of British Industry (CBI) predicts annual UK GDP growth of 1.0% in 2010, followed by 2.5% in 2011.

A recent press release from business group the CBI claims the economy is expected to grow by 0.3% in the first two quarters of 2010 and by a slightly faster 0.5% in the next two quarters.

Inflation is also expected to be slightly higher than previously forecast in the near-term, but is then expected to fall back considerably as Consumer Price Index (CPI) inflation drops below the Bank of England’s 2% target by the end of 2010. This is set to remain below target throughout 2011.

GDP in 2011

The CBI predict the Gross Domestic Product (GDP), the measure of the country’s overall output, is not expected to have returned to pre-recession levels by the end of 2011.

Richard Lambert, CBI Director-General, warned:

“The CBI expects the recovery in 2010 to be slow and sluggish, with few signs of real strength until well into next year.”

Payplan

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Mortgage Lending Up in February

Mortgage lending reaches £9.2 billion

Gross mortgage lending in February increased to an estimated £9.2 billion, a 6% rise from £8.7 billion in January, according to new data published by the Council of Mortgage Lenders.

The increase, which is unusual for the short month for February, is in contrast to January’s performance where bad weather the end of the Government’s stamp duty holiday is thought to have put-off potential home-buyers.

The Council of Mortgage Lenders (CML) reported lending in February down by 6% on the £9.7 billion seen in 2009.

Upon the recent figures the CML report the first two months of this year broadly in line with their forecast for lending of £150 billion for 2010 as a whole.

CML economist Paul Samter commented:

“Given the short-term weakness and distortions in the housing market, in addition to signs of more properties coming onto the market, it was perhaps unsurprising to see falls in some of the monthly house price indices in February. With activity unlikely to pick up much in the short term, we would expect to see further modest volatility in the coming months.”

The Council of Mortgage Lenders’ members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK.

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AA Warn Petrol Prices Set for Record High

Petrol Prices to hit £1.20 a litre, Warns AA

The AA have recently urged motorists to brace themselves for record high petrol prices this year as the cost of unleaded fuel surges to £1.20 a litre or more.

Petrol prices are set to rise in the next few weeks due to recent increases in the wholesale of petrol, pushing prices up at the forecourt.

Both the AA and RAC have shown concern towards those struggling on tight budgets and have urged the Chancellor to postpone the introduction of a planned 3 pence rise in petrol duty, due to come in on 1 April 2010.

The AA’s president, Edmund King, said: “The UK is barely out of recession, yet petrol threatens to rise to record prices seen during the boom of 2008, shortly before the collapse into recession.”

Payplan

If you are struggling to budget the increase in petrol prices why not contact Payplan today for free, confidential advice and help with debt or call 0800 280 2816.

You can also prepare for future petrol price rises by visiting Payplan’s tips for saving money on fuel costs.

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