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Chancellor delivers wide-ranging Autumn Statement

Chancellor delivers wide-ranging Autumn Statement

Category: Economy

Updated: 29/11/2011
First Published: 29/11/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Chancellor of the Exchequer George Osborne announced an increase in the state pension as part of a wide-ranging Autumn Statement this afternoon.

Speaking at a packed House of Commons, George Osborne said that the state pension would increase by 5.2% - in line with inflation - to £107.45 per week.

Also rising in line with inflation will be pension credits and 'working age' benefits, which the Chancellor said would increase the incomes of the poorest people in the UK . Working tax credits will also be increased by 5.2%, but other credits will have their rises restricted.

On housing, it was announced that the 'Right to Buy' scheme is to be reinvigorated, with social housing tenants given 50% discounts to buy their homes.

The funds raised by the scheme will go towards building new affordable housing, while a £400 million scheme to push forward construction products was outlined.

The mortgage indemnity scheme that will allow 100,000 people to buy their first homes with a deposit of just 5% was also confirmed.

But there was tough news on the economy, with Mr Osborne conceding that a recession in the UK could be hard to avoid if the debt crisis in the eurozone is not improved.

The Chancellor told MPs that the Office for Budget Responsibility (OBR) has cut the UK 's growth from 1.7% to 0.9% for 2011 and 2.45% to 0.7% next year.

It then expects to see the economy grow by 2.1%, 2.7% and 3.0% in the 2013, 2014 and 2015 respectively.

But while growth falls, borrowing by the Government is to increase to the tune of an extra £100 billion.

Borrowing is set to peak this financial year (2011-12) at £127 billion, dropping to £120 billion, £100 billion, £79 billion and £53 billion in the subsequent years.

The Chancellor acknowledged that borrowing levels would not fall as quickly as he would have liked but said that falling debt charges would see that the coalition will lay out £22 billion less in repayments than was originally predicted.

Turning to business, up to £40 billion is to be lent to small and medium-sized businesses to combat constrained credit lines that are hampering companies, while the business rate holiday relief for small firms has been lengthened to the spring of 2013.

Banks were told that the levy placed on them would be increased from 0.078% to 0.088% from January 2012, but that they would not be part of the Transaction Tax that has been put forward by the European Union.

The Shadow Chancellor Ed Balls was unimpressed with the Chancellor's statement and said the figures from the OBR were confirmation that the coalition's austerity plan had failed.

"His economic and fiscal strategy is in tatters," he added.

In a heated exchange, George Osborne hit back, claiming that his counterpart had not done enough to keep the banks in check when he was in charge of the City during Labour's spell in Government.

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