Emergency Budget 2010

Time to tighten those belts!

Giving his first budget since becoming the youngest Chancellor of the Exchequer for more than a century, George Osborne outlined the coalition's tough financial package for the coming year. In the wake of the "swingeing cuts" tagline outlined during the early part of the election campaign, it was Mr Osbourne who delivered the Conservatives' promise of holding a budget within 50 days of gaining power and the news that, perhaps, the majority of country expected - it's really time for the belts to be pulled in.

The Budget followed Mr Osborne's maiden Mansion House speech to the City last week, during which he outlined the Conservatives' proposals to shake up the country's financial regulatory system. Set against the backdrop of his announcements over the FSA and criticism that the country's poor will be the hardest hit, Mr Osborne outlined a rise in VAT, benefit cuts and a reduction in Government departments.

The headlines of today's announcement include:

A rise in VAT from the current 17.5 percent to 20 percent from January 4 next year
Personal tax allowance increased by £1,000 - meaning that over 880,000 people will be removed from the tax system altogether
Housing benefit and family tax credit cuts - totalling an 11 billion saving by 2014/5
28 percent tax on capital gains for higher rate taxpayers
A two year pay freeze for public sector workers earning over £21,000
Government departments to be cut by 25 percent over four years (aside from health and international development)
The imposition of a levvy on UK and the UK operations of foreign owned banks

Aside from the above, Mr Osborne announced that the Government would be exploring changes to the aviation tax system. Furthermore, a white paper will be published tackling regional economic differences later on this summer.

A number of key infrastructure projects were also referred to by the Chancellor, which will remain unaffected by the planned Government cuts including the redevelopment of Birmingham New Street station, the extension of the Manchester Metrolink and the upgrade of the Tyne and Wear Metro.

As for planning, Mr Osborne made reference to a simplified planning system in an effort to boost growth.

With the "difficult decisions" previously outlined by Prime Minster, David Cameron, now made, we will have to see how the coalition moves forward with managing the country's finances during what will be a challenging period.

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Emergency Budget 2010

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