Chancellor George Osborne today revealed a set of new measures aimed at improving the UK economy.
In his Autumn Statement earlier to MPs at the House of Commons, Osborne said that the UK economy was now forecast to grow by 0.9% this year - compared with 1.7% forecast in March and 0.7% next year down from the 2.5% March forecast. This is at odds with some commentators already predicting that the country is about slide back into recession.
Ahead of the Autumn Statement, Downing Street had said: “Our plan is to ensure we keep Britain safe from the sovereign debt crisis and we will do what is necessary to meet our fiscal target.”
However, commenting while delivering his statement, Osborne said: “If the rest of Europe goes into recession it may be hard to avoid it here in the UK.”
The Chancellor also outlined that borrowing would be £112bn higher in the next four years than previously predicted but said that debt interest payments would be £22bn lower. He conceded he would not be able to meet his aim of eliminating the structural deficit and to see national debt falling by 2014/15 - a year ahead of target - because “that headroom has now disappeared”.
In a bid to help small businesses he announced a credit easing programme to underwrite up to £40bn in low-interest loans to small and medium-sized firms. He also confirmed the setting up of a £1bn business finance partnership to help secure funding for medium-sized firms and extended the business rates holiday until April 2013.
Also, from April 2012, anyone investing up to £100,000 in a new start-up business will be eligible for income tax relief of 50%. In 2012, any tax on capital gains invested in such businesses will also be waived.
Osborne said: “All of this takes Britain in the right direction. It cannot transform our economic situation overnight.”
Food & Drink Federation, director of communications Terry Jones, said: “At first glance this looks like a pro-business autumn statement with a clear focus on growth.
"SMEs have repeatedly highlighted their concerns about accessing finance and we are pleased to hear the proposals for credit easing that should enable many of our small businesses to expand, pursue new export markets and create jobs.
“The move to remove much unnecessary red tape is likely to be welcomed by the industry and we await details of where this will apply. Our members have been particularly concerned about increasing regulation on employment, so plans to exempt small employers could potential give them the confidence to consider creating new jobs.
“We are already pushed to the hilt on commodity prices and escalating energy charges so the freeze on fuel duty will ease difficult operating conditions for the industry.”