A summary of the key points
• The Office for Budget Responsibility cut growth forecasts for 2012 down from 0.8% to -0.1%. Next year’s estimate was revised down to 1.2% from 2%.
• Borrowing in the current financial year has been revised lower to around £80bn, thanks mainly to the coupon transfer from the Bank of England’s gilt holdings. It is expected to rise to £99bn in 2013-2014.
• The DMO has announced a cut in the number of Treasury bill auctions of £15bn in the current financial year following the downward revision to borrowing. This has benefitted the short-end of the yield curve, but 30 year yields have risen. This afternoon, 10 year yields are at 1.76%.
• The Chancellor announced a number of fairly significant tax changes: the 3p rise in fuel duty planned for January has been scrapped while corporation tax will be cut in April 2014 from 22% to 21%.
• Mixed news on pensions - the annual tax free allowance will be cut to £40,000 from £50,000 in 2014 while the lifetime allowance will be reduced to £1.25m from £1.5m. However, the capped drawdown limit for pensioners is being increased from 100% to 120%.
• For higher earners, the threshold for paying 40% income tax is being increased by 1% in both 2014 and 2015 but still at a slower pace than inflation. Capital Gains Tax and Inheritance tax exemptions will also be increased by 1%. The basic income tax threshold is to be raised by more than previously announced, to £9,440.
• The Chancellor hopes to raise £5bn over the next six years in tax from undisclosed Swiss bank accounts through a treaty with Switzerland. There were also a number of measures announced designed to combat tax evasion including 2,500 more inspectors.
• The ISA limit will be increased in April to £11,520 while the government plans to consult on allowing investments in small and medium scale enterprises equity markets like AIM to be held directly in ISAs.
• A number of infrastructure investments were announced for road, rail and broadband services.
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