Notesale: Turn your study into money

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George Osbourne, the current Chancellor,
speaks in the House of Commons for over an hour to inform MP’s of the plans
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2
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If the output gap is closed and the economy picks up as much pace as it can – like
the runner, but the government still can’t raise enough revenue from taxes, then there is a
structural deficit – similar to the runner not having enough power to reach a faster speed
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What might be in the Chancellor’s plans?
His plans may be to use the budget to stimulate more investment and exports, because they
are lacking currently
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People want to see the
fundamental problems being tackled as they are investing for the long term so would be
wanting a long term budget – providing a sustainable recovery stimulating sustainable
demand
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An above inflation increase in
the ISA allowance may result from this tax issue
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Why is ex Chancellor Norman Lamont worried about the 40p rate of income tax?
He is worried because the policy would be a ‘dead end’, and more tax is raised from a
smaller amount of people – paying the 40% income tax rate
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5
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It was introduced in order to tackle rising national debt, and cuts in taxes, tariffs and excises,
in order to promote free trade
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In 1925, Winston Churchill’s budget revealed that
Britain was to return to the so called ‘Gold Standard’, by reinstating a fixed exchange rate of
$4
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Also, in 1993, Chancellor Norman Lamont brought
about plans to raise revenues significantly in future years
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He said that this would help reduce government borrowing in future,
and would be a way to help sustain growth and strengthen the economy
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What do various industry and Union bodies want from the 2014 budget and why?
Manufacturers want rising energy costs to be addressed, specifically the carbon tax
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Manufacturers also would like to see more investment in training programmes by the
government
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In order to achieve
this, they think that reversing tax reductions on company profits, replaced by higher tax
breaks for investment
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They also want the Air Passenger Duty - charged on flights departing from the UK - to be
frozen
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The BBA is also pushing for a supply
chain finance scheme which would offer backing for the importing of components which
would end up being exported in the form of completed products
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They laid out four options to do this – one of which is scrapping
business fates in favour of tax that is based on the energy efficiency of a building
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They have also suggested a tapered end to the help to buy scheme
rather than the planned abrupt end in March 2016
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Summarize the current position and forecast of national debt and deficit
UK Debt has increased in recent years, and doubled to more than £1 trillion in the past five
years, which was mainly due to the financial crisis around 2007 and the recession that
resulted from it
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The
budget deficit is the difference between government spending and revenues
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8
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The gap has begun to narrow and the
growing employment levels leading to employers paying more, and relaxation of inflation,
are supporting the predictions of wage increases growing faster than cost of living increases
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£300 million of new investment in Liverpool’s port and
a double in sales to the USA – including Range Rovers
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However some people
think that the recovery is consumer driven
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Technological investment in the UK is seen as slow behind other forms of investment in the
UK
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However in the USA,
technological investment is 10 times than the UK, and is 5 times as much in China
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On the other hand, aerospace investment in the UK is at its highest since the early
1960’s, and is second only to the USA
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Some families fee l the
recovery is occurring as more and more extra disposable income is becoming available
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9
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Reflect on
growth, unemployment and deficit/debt in particular
In the 2014 budget measures to support a steady economic recovery may be set out, such as
a rise in tax rates for the wealthy in order to help costs of living of the poorer, and to help
reduce the budget deficit
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In addition, the Chancellor
may increase taxes on alcohol/cigarettes in order to decrease demand and reduce the
extent of the externalities caused by excessive drinking and smoking
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Homework – Report on this year’s budget
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Tax alterations in the budget come in the form of a rise in the 40% income tax
threshold from £41,450 to £41,865 in April, and then to rise by another 1% to £42,285
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Beer duty will however be cut by another 1%
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These changes in taxes will be
likely to lead to a reduction in consumption for some alcoholic products due to tax increases
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Savings regulations have been amended so that the tax free limit for ISA’s has been
increased to £15,000, which may increase incentives for saving by consumers
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These changes may help the UK
economy to become more sustainable because saving is being encouraged, however may
lead to growth slowdown if consumer spending is altered too much
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$140 million has been added to the
budget for flood repairs, which will help to return the UK to its former infrastructural state

after recent flooding and storm events
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This is the first development of its kind in the UK for 100 years, and
will also go towards helping the UK housing shortages
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This has gone somewhat enough to meet the asks of the
representing body of British Industry, though they wanted the allowance to go beyond 2015
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Furthermore, export finance has doubles to £3 billion and interest rates on
the lending scheme have been cut by a third, this will hopefully lead to a more sustainable
UK economy as export trade will benefit
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Also
unemployment will be likely to fall if investment levels increase and businesses are able to
expand
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This will enable more production to take place
as less money will be taken out of manufacturing companies through energy costs
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A planned fuel duty rise which was to be put in place in September has been scrapped which
will benefit firms and consumers as fuel prices will will not be set to rise too much above the
expected fluctuations as no tax increase will be imposed
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This will not only help consumers but also businesses as manufacturers and
other exporting businesses will not suffer from high tax rates on their products

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