Tomorrow Chancellor George Osborne is slated to announce the government’s yearly budget to MP’s in the House of Commons. Considering the relevance the annual budget has on the UK economy, what can we expect from the Chancellor’s announcement?
Experts have gone on record in recent days suggesting that the Chancellor’s annual plan will focus on the cost of living; outlining provisions to raise the standard of living across the country.
The argument for this suggestion is that employees are beginning to benefit from the UK’s sustained economic recovery, as the economy is set to return to 2008 levels by summer this year. Another argument experts are using to validate the suggestion, is that tax cuts that have been aimed to benefit those with modest incomes are putting swathes of the UK population in a more favourable financial position.
As previously stated, the UK economy is largely acknowledged as having almost recovered from the Great Recession. UK GDP growth is set to return to 2008 levels as soon as the second quarter of this year and with unemployment almost having fallen to the 7% benchmark set out by the Bank of England, as well as wages rising faster than consumer prices this year, have also contributed to this more positively revised economic outlook.
Experts are therefore of the opinion that this more favourable economic climate will enable the Chancellor to announce the implementation of financial measures that will prove politically popular for the Conservative party. Namely these measures will seek to improve the situations of economically stretched families.
Specifically, the Chancellor’s plans to aid the financial situation of middle class families are expected to include a more rigorous support system for the rising cost of childcare. From autumn 2015, families will be able to claim up to £2,000 per child tax relief for the cost of childcare. He is expected to also announce a further £500 inflation busting increase allotted in the income tax personal allowance.
Of his plans, Osborne has already said that: “The message I’ll be giving in the Budget is that the economic plan is working but that the job is far from done.” However he has also said that: “a lot of people are in continuous employment and they have seen rising earnings in real terms” and that is why experts predict that Osborne will seek to announce measures that will boost spending power.
Boosting spending power for societies largest population sector, the middle class, has long been a way to boost economic growth, Simon Morris readers. It’s clear that Osborne is relying on this tried and tested method to further stimulate the UK economy so that it finally reaches 2008 levels.