With tax and unemployment set to rise, just how will this Government expect to cut costs and recoup their current spending...
Alistair Darling stated that the UK will have to borrow a record £175bn as he admitted our economy faces its worst year since the Second World War. Gloomy news for families perhaps already struggling with the credit crunch realities.
The chancellor unveiled a shcoking new 50% tax rate for earnings over £150,000 and also cut future spending plans in a Budget which saw an increase of 2p on fuel, 1p on a pint of beer and 7p on cigarettes. He stated that the budget package would 'steer the UK through to recovery', however, the Tories said the economy was in an "utter mess".
Conservative Party Leader David Cameron said not enough had been done to get spending under control and "Britain simply cannot afford another five years of Labour".
KEY POINTS
50% tax rate for earnings over £150,000
Big debt and deficit increases
Economy shrinks at record rate
Public spending squeeze planned
Books not balanced until 2018
2p on fuel, 1p on a pint of beer and 7p on cigarettes
£15bn public sector 'efficiency savings'
Claw back tax relief on top earners' pension
£2bn help for young unemployed
£1bn to boost housing market
£2,000 car scrappage scheme
Total government debt will double to 79% of GDP by 2013 - the highest level since the Second World War. The annual budget deficit will rise sharply to £175bn for the next two years.
Mr Darling said the various tax raising measures would raise more than £6bn by 2012.
That would help pay for a real terms boost in pensioners' income - including new pension recognition for grandparents who care for their grandchildren - and help for savers with ISAs.
Jobs
The Government pledged more help to get people back into work quickly and support businesses and homeowners facing problems. Everyone under the age of 25 out of work for 12 months or more will be offered a job or a place on a training scheme. Also, the government will create or support up to 250,000 jobs in deprived areas.
There was also the extension of the Stamp Duty holiday on properties sold for less than £175,000 until the end of the year as part of a £1bn package geared to boost house sales and building.
In his speech, Mr Darling confirmed the economy would shrink by 3.5% in 2009 - far worse than his pre-Budget forecasts. Public borrowing will also soar to record levels as the Treasury wrestles with a combination of falling tax receipts, higher spending and the cost of bank bail-outs.
For more information on the 2009 Budget visit www.directgov.co.uk
