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‘The economy is healing’ – Osborne

The Chancellor’s Autumn Statement highlighted that the economy was “on track” to recovery, despite George Osborne’s admissions that it was weaker than expected and that it would take longer than predicted to cut the deficit.

The Office for Budget Responsibility (OBR) is now predicting a contraction of 0.1% in 2012, down from the 0.8% growth forecast in March.

The economy is then set to grow by 1.2% next year and will continue rising, according to the OBR.

The deficit has fallen by a quarter over the last two years, Osborne stated, and pointed to OBR forecasts which expect the deficit to fall from 6.1% this year to 1.6% in 2017.

Osborne said the OBR has judged that the Government looks likely to miss the target of national debt to be falling by 2015-16. Instead, the OBR believes debt as a share of GDP will now peak at 79.9% in 2015-16, instead of 76.3%, a year earlier, as it predicted in March.

He said: “It’s taking time, but the British economy is healing. It’s a hard road, but we’re getting there. Britain is on the right track – and turning back now would be a disaster.”

Shadow chancellor Ed Balls responded to the Budget: “The truth is he's failed on growth and the deficit, and what's his answer? More of the same.”

The Autumn Statement also included a reduction in lifetime allowance on tax relief for pensions from £1.5bn to £1.25bn, and the annual tax free limit down from £50,000 to £40,000, to raise £1bn for the Treasury.

No new tax will be implemented on property, after the Liberal Democrats push for a mansion tax was vetoed.

Most working age benefits will rise by just 1% for the next three years, with carers benefits and disability benefits to go up in line with inflation. Osborne also announced that a welfare uprating bill will be introduced.

The planned 3p fuel duty rise has been cancelled and a 1% cut in corporation tax for UK companies will come into force from April 2014. Personal tax allowance will rise by £235 more than planned next April.

Funding for UKTI will increase by 25% and a new business bank will be set up, whilst the temporary doubling of the business rates relief scheme will be extended for another year.

(Image: PA Wire)

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