Wednesday March 12, 03:22 PM
UK BUDGET Darling's policies loosen 2008/9 public finances UPDATE
(adds detail)
LONDON (Thomson Financial) - The policies announced in Alistair Darling's maiden Budget will cost the public coffers around 140 mln stg during the next financial year but bolster them in the years thereafter.
In 2008-09, the UK Exchequer will loose around 140 mln stg on a price-weighted basis as a result of the policies announced today. This is mainly due to increased payments to pensioners that will cost around 575 mln stg and the delay in the rise in road fuel duty, costing 550 mln stg.
But in 2009-10, the Treasury forecasts the public coffers should be bolstered by around 790 mln stg, supported by 505 mln stg coming from alcohol duty and 464 mln from the new levels of vehicle excise duty.
In 2010-11, public finances are expected to be boosted by a further 1.9 bln stg, again reflecting higher receipts from alcohol and vehicle excise duty along with the scrapping on incentives for biofuel use that will bring in an extra 550 mln stg.
Chris Sanger, head of tax policy at accountants Ernst and Young, said in fiscal terms the Budget was fairly neutral.
'The alcohol duty increases and the higher rates of vehicle excise duty and the removal of incentives for biofuels are the only revenue-raising measures with any impact,' he said. 'The Chancellor may still be taking anything that looks shiny to build his new nest, but like a magpie, he seems to be building without an overall plan.'
The Treasury said the changes announced in the Budget will support growth, with the overall fiscal impact in 2007-08 adding 0.2 pct to GDP, 0.9 pct in 2008-09 and 0.7 pct in 2009-10.
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