Autumn Financial Statement 2011 – Key points update

Chancellor George Osborne has updated MPs on the state of the economy and the government’s future plans in his Autumn Statement as the Office for Budget Responsibility (OBR) publishes its latest growth and borrowing forecasts. ECONOMIC GROWTH 2011 forecast revised down to 0.9% 2012 forecast revised down to 0.7% In 2013, 2014 and 2015, forecast growth will be 2.1%, 2.7% and 3% GOVERNMENT BORROWING Borrowing forecast to be £127bn in 2011-2, falling to £120bn, £100bn, £79bn and £53bn in following years Extra £112bn in borrowing over four years Debt to GDP ratio to peak at 78% in 2014-5, falling afterwards PUBLIC SECTOR PAY AND PENSIONS 1% cap on public sector pay rises for two years after the end of current freeze next year Review into regional pay adjustments Rise in state pension to 67 to be brought forward to 2026, saving an estimated £59bn TAXES AND ALLOWANCES Benefit payments uprated by 5.2% next year, in line with inflation Basic state pension to rise by £5.30 to £107.45, pension credit to rise by £5.35 Below inflation increase in some working tax credits Bank levy to be increased in January HELP FOR BUSINESS Credit easing programme to underwrite up to £40bn in low-interest loans to small and medium-sized firms £1bn business finance partnership to help secure funding for medium-sized firms Regional Growth regeneration fund to get £1bn in extra funding £250m support package for energy-intensive firms Rate relief holiday for small firms to be extended to April 2013 JOBS AND TRAINING £1bn “youth contract” to subsidise six-month work placements for 410,000 young people EDUCATION AND FAMILIES £1.2bn spending on school buildings. 100 additional free schools to be built £50 cut in water bills for families in the south-west of England Childcare places for most deprived two-year olds in England doubled to 260,000 HOUSING Mortgage indemnity scheme to help up to 100,000 people buy homes with 5% deposit. £400m scheme to kick-start stalled construction projects in England 50% discount for social tenants wanting to buy their own homes INFRASTRUCTURE SPENDING £5bn new spending over three years, with the go-ahead for 35 road and rail projects across England Aim to unlock a further £20bn in investment from pension funds. OVERSEAS AID Funding will not exceed 0.7% of total GDP 2011 BUDGET PREDICTIONS In March, the OBR predicted the economy would grow 1.7% in 2011 and 2.5% in 2012, lower than previous forecasts. It forecast government borrowing of £146bn in 2010-11, falling to £122bn in 2011-12, £101bn in 2012-3, £70bn in 2013-4, £46bn in 2014-5 and £29bn by 2015-16.