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Darling set to cut growth forecasts

Chancellor Alistair Darling looks set to cut growth forecasts and ramp up borrowing in his first budget on Wednesday as the economy faces its most challenging test in more than a decade.

Posted: Wednesday, March 12, 2008, 7:35 (GMT)
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But Darling is unlikely to countenance such a huge change to his projections and the actual adjustment in borrowing forecasts will probably be smaller.

He is sure to argue that letting borrowing rise in a downturn is absolutely necessary and is expected to pencil in a fiscal tightening of around 5 billion pounds in a couple of years to get the public finances back on track.

GREEN BUDGET

Few analysts are predicting any substantive measures in this budget as the cuts in corporation tax and income tax to come into effect in April were already announced by Brown, when he was finance minister, last year.

Treasury officials have told Reuters the budget will have a "strong green theme". Darling is considering slapping on extra duty and a showroom tax of some 1,000 pounds on gas-guzzling cars, according to one government source.

There will be similar penalties and incentives applied to company car fleets to make them more environmentally-friendly and there could be some changes to aviation duty.

Darling will set out a timetable warning retailers that they will be forced to charge for plastic bags unless they slash the number handed out to shoppers.

The government is also considering using powers to bring down electricity and gas prices for poorer households with pre-paid meters, according to a government source.

Darling is sure to try make further progress in cracking down on tax avoidance schemes and is expected to finalise his proposal for a new levy on wealthy foreign residents.

And booze-mad Britons are gearing up for the first rise in duties on spirits in over a decade as the government tries to crack down on binge drinking among the young.



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