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Stagnated growth and extended austerity – Autumn Statement

Chancellor George Osborne’s Autumn Statement, due this afternoon, is expected to make it clear that austerity measures will continue for years, as he misses targets on reducing the national debt and deficit.

Britain will have had to borrow around £10bn more than expected this year, he will reveal, alongside independent figures on UK growth likely to show a stagnated economy.

Osborne is expected to say: “In this Autumn Statement, we show that this Coalition Government is confronting the country's problems, instead of ducking them.

“The public know that there are no miracle cures. Just the hard work of dealing with our deficit and ensuring Britain wins the global race.”

He is also expected to limit benefits rises in an attempt to break the link between benefits and inflation. A below inflation rate rise of 1% is expected.

The Conservatives have vetoed the Lib Dem push for a mansion tax or new council tax bands for the most expensive homes, while the Lib Dems are said to have vetoed a benefits freeze and a proposal to scrap housing benefit for the under-25s.

The Chancellor is likely to further reduce the tax-exempt amount that people can pay into their pension to either £40,000 or £30,000, to raise nearly £2bn. Alternatively, the level of pension tax relief high earners can claim could be cut.

Positive announcements should include cutting a 3p rise in petrol duty, due to come into force in the new year, and a windfall tax on banks could be extended. A new type of private finance initiative, PF2, will also be introduced.

The Government has already announced that £5bn will be raised from spending cuts across most Whitehall departments to fund schools, roads, science and infrastructure.

In terms of energy, Osborne will announce an expansion of the gas industry, and will approve up to 30 new power stations to produce 26 gigawatts of energy.

The Autumn Statement will be launched from 12.30 today.

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