UK Pre-Budget Report Creates Uncertainty
Alistair Darling, UK Chancellor of the Exchequer, sat down from his annual pre-budget speech leaving the UK bemused.
He laid the foundations for some headlines. VAT returns to 17.5% in January 2010. National Insurance, a form of income tax, will increase by 1% in 2011.
Small businesses escape a planned 1% increase in corporation tax. There were a raft of other minor incentives but nothing startling.
More significantly the Chancellor announced that the UK economy shrank by 4.75% in 2009, with the nation needing to borrow £178bn this year and next.
There was a minor cheer for measures to dissuade the banks from paying huge bonuses to their staff.
But the big questions weren't answered. The UK's growing national debt needs to be repaid and there were no clear measure for doing this. Money needs to raised through taxes and saved through reduced public spending. But details of how this will be done were notably absent.
Perhaps more will become clear in the next few days as the details are picked over. But what's obvious is that the Chancellor's announcements were largely shaped by the impending General Election, which must happen by the middle of 2010.
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