In his Pre Budget Report speech to the House of Commons, Chancellor of the Excheqer Alistair Darling said the country has faced: “The Biggest financial crisis for half a century.
Although not mentioned in the speech, the report outlines the formation of Infrastructure UK, to manage the financing and delivery of major infrastructure in the UK.
“The task today is to promote long term growth,” he said.
“To promote growth, we need to invest in the dynamic sectors of the future – in digital, bio and low-carbon technology. I will announce measures that will support these industries.”
He said: “Recent market reaction to financial problems in Dubai highlights just how fragile world confidence remains.
“So while I am confident that the UK economy is on the road to recovery, we can’t be complacent,” he said.
However, he confirmed that VAT would return to 17.5% on January 1.
But he confirmed that the 1p increase in corporation tax will be postponed to benefit small businesses, he said.
“I am confident the UK economy will start growing again by the end of the year,” he said, despite a contraction expected to be 4.75% of GDP over the course of this year.
“Next year , I forecast growth of between 1 and 1.5% – as I said at the Budget,” he said which will rise to 3.5% in 2011 and 2012.
Darling said that bank interventions had been successful, and that he has now revised down the liabilities for banks down from £50bn to £10bn.
He said he expectedm “public sector net borrowing, as a share of GDP, falls every year and is more than halved by 2013-14; and net debt, as a share of GDP, is falling in 2015-16.”
He said borrowing would be:
- £178bn this year - 12.6% of DGP
- 2010/11: £176bn - 12% of GDP
- 2011/12: £140bn - 9.1% of GDP
- 2012/13: £117bn - 7.1% of GDP
- 2013/14: £96bn - 5.5% of GDP
- 2014/15: £82bn - 4.4% of GDP
“To cut support now could wreck the economy and this is a risk I am not prepared to take,” he said. “This year public sector investment reached a 30-year high and has delivered over 70 road and motorway schemes, and improved journey times across the rail network.
“Work is now underway on Crossrail, the Thameslink project, and from this month, the upgrade of the M1. All this work will continue.
“The Government will respond, as well, early next year to proposals for a new high speed rail line from London to West Midlands and to the North and Scotland,” he said.