Budget offers help to savers, factories

Reuters/LondonFinance Minister George Osborne courted voters ahead of an election in 2015 with promises of help for savers, tax breaks for manufacturers and lower levies on alcohol and bingo. In an upbeat annual budget statement, Osborne announced upgrades to official forecasts for the country’s economic growth, although he stressed he would stick to his belt-tightening plans which will include a cap on welfare spending. His help to savers - who have been hurt by near-zero interest rates - included an easing of requirements on pensioners to buy annuities and creation of government savings accounts which will pay above-market interest rates to people aged over 65. Shares in insurance firms fell on the announcement. Shares in gambling firms also weakened on news of a new tax for the industry, even as Osborne cut a levy on bingo. Britain goes to the polls in May 2015 and the annual budget plan is one of the government’s last opportunities to make a difference to how people feel about their finances before then. The Labour opposition dubbed the budget as one that failed to help ordinary people.Osborne hopes the improving economy and his focus on fixing public finances will be trump cards in the fight against Labour, which remains a few percentage points in polls ahead of the Conservatives. “I have never shied away from telling the people about the difficult decisions we face. And just because things are getting better, I don’t intend to do so today,” he said, adding that more spending cuts would be needed after the election. Osborne announced the latest in a series of increases in the how much people can earn before paying income tax. He also raised the threshold at which British earners pay a tax rate of 40% for the first time since the 2010 election.Treasury officials stressed the budget did not represent a relaxation of the government’s fiscal drive.The new forecasts by the Office for Budget Responsibility painted a picture of solid recovery with the economy now set to grow 2.7% this year.That was higher than a forecast of 2.4% made as recently as December and much higher than an estimate of 1.8% a year ago, when Britain was still struggling to shrug off the after-effects of the global financial crisis.“That’s the biggest upward revision to growth between budgets for at least 30 years,” Osborne said to cheers from members of his Conservative Party.Growth in 2015, Osborne said, was expected to be 2.3%, up slightly from December’s forecast for 2.2%. The OBR’s forecasts, while higher than in December, are less optimistic than many others.The Bank of England expects growth of 3.4% in 2014 in Britain, faster than most other developed economies. Even so, the economy remains smaller than it did in 2008, before the financial crisis, underscoring how slow its recovery was before it picked up speed in the last 12 months.In a bid to help put the recovery on a sounder footing, Osborne announced a doubling of a tax break for firms that invest and measures to help bring down electricity bills. The government has been trying to reduce the reliance of the economy on consumer spending since it took power in 2010. The improved outlook shaved £24bn from the official forecasts for Britain’s still huge budget deficit over the next few years. It also means debt is likely to peak a bit lower than previously thought.To help keep Britain on track with its plan to get rid of the deficit by the 2018-19 fiscal year, Osborne said the government will cap the amount of money it spends each year on welfare at £119bn in the 2015-16 fiscal year.Labour leader Ed Miliband criticised Osborne’s budget. “The chancellor (Osborne) simply reminded people of the gap between his rhetoric and the reality of peoples’ lives - living standards falling for 44 out of 45 months under this prime minister, unmatched since records began,” he said. “No amount of smoke and mirrors can hide it.”With an eye on Scotland’s independence referendum, Osborne announced new tax breaks for investment in North Sea oil and gas production and took a swipe at Scottish nationalists, noting how their estimate of the value of the remaining reserves are worth had fallen further behind those of the OBR. Osborne also froze duties on whisky and other spirits, a move which is likely to be welcomed by Scottish distilleries.