Budget 2009: Alistair Darling in Downing Street
- 00:01:39
- ITN
Budget 2009: Alistair Darling in Downing Street
Chancellor Alistair Darling is due to deliver one of the most anxiously-awaited Budgets of recent years as Britain battles recession. Prime Minister Gordon Brown told an earlier meeting of the Cabinet that the financial plan will "prioritise growth and jobs and invest in the new economy of the future". Mr Darling - who earlier left 11 Downing Street for the House of Commons where he will deliver his second Budget statement - is left with little scope for fresh action to revive an economy struggling under a savage downturn. At the Cabinet meeting, Mr Darling told fellow ministers the downturn is "unprecedented" since the war and is affecting every country in the world. But he highlighted recent forecasts from international bodies, such as the OECD, which he said suggested Britain is not being hit as hard as other comparable countries. Borrowing is likely to hit £160 billion in 2009 and another £175 billion a year later and Mr Darling has already indicated he will sharply downgrade his forecasts for output. But Bank of England Governor Mervyn King has already warned that the Government cannot afford a repeat of the £20 billion "stimulus" package announced in November's Pre-Budget Report (PBR). However, the Chancellor will acknowledge that his forecast last winter that the economy will shrink by between 0.75 per cent and 1.25 per cent was over-optimistic, with a revised estimate of a contraction of at least 3 per cent. And he is expected to predict that the economy will return to growth next year, with output increasing by around 1 per cent. Mr Darling is also set to give his own estimate of the cost of the bank bail-out - put at £60 billion according to reports - admitting for the first time that the Government may not recover the full costs. But just hours after the grim state of the economy was underlined by official figures showing it has entered a period of deflation, the Treasury said that an even higher bank bail-out estimate of £200 billion by the International Monetary Fund (IMF) was issued in error and had been withdrawn. There was no immediate explanation for the mistake - which is a potential embarrassment for the global financial watchdog - and no indication of what the correct figure should be. Mr Darling will instead look at measures to tackle unemployment, the housing crisis and how to get public finances back on track, such as the announcement of a further £10 billion-a-year in efficiency savings - on top of the £5 billion announced in November's Pre-Budget Report (PBR). With jobless figures predicted to hit 3 million by next year, Mr Darling plans to set out a £2 billion package that will expand the range of Jobcentre Plus services and launch a new initiative to give unemployed young people more training and work experience. And as part of a £1 billion package to jump-start the stagnant housing sector, the stamp duty holiday on homes worth up to £175,000 is expected to be extended to the end of the year, while it is reported that the Treasury will underwrite mortgage-backed securities worth £50 billion in an attempt to encourage more lending to homebuyers. The Chancellor is also keen to portray it as a "green" Budget with a reported £500 million to pay for home insulation and for investment in wind farms and other renewable technologies. But environmentalists have slammed a vehicle "scrappage" scheme which offers motorists up to £2,000 if they trade in their old car for a more environmentally-friendly new one. In other measures, Mr Darling is expected to announce plans to "name and shame" large-scale tax avoiders and incentives for oil companies to explore new fields in the North Sea.
ITN | April 22, 2009
