Budget 2007 — Economic View

The Chancellor of the Exchequer remained upbeat in what many expect to be his final Budget predicting that the UK economy would continue to grow strongly over the next couple of years so boosting tax revenues. Combined with his confirmation of tight public spending plans for the period from 2008/9 to 2010/11 this suggests that over the next few years the budget deficit will decline steadily from recent high levels. Despite some dramatic cuts in headline income and corporation tax rates the overall impact of the Budget announcements was broadly fiscally-neutral due to offsetting tax increases elsewhere. The new Treasury forecasts for economic growth and for public borrowing tax and spending are discussed in...