News
Glenigan - Budget 2010
30/03/2010
This was a budget low in detail, focussing more on political differences between the government and the opposition than economic policy. Although all parties agree that there have to be spending cuts in order to deal with public sector debt, exactly what would be cut was always unlikely to be announced before an election.
On a positive note for the private housing market, stamp duty for first time buyers was abolished for house purchases under £250,000 until April 2012. The move follows a marked slowing in property transactions following the end of the previous stamp duty 'holiday’ and should provide additional support for the anticipated rise in private housing starts during 2010. The cost of the measure is to be paid for by a new 5% stamp duty rate for house purchases over the value of £1 million from April 2011.
From a construction point of view, there were some promised funds for “meeting the UK’s Infrastructure and Energy Challenges”. These included £84 million to fund the repair of local roads hit by this winter’s bad weather, and a £250 million fund for increasing national road capacity (although the latter is to be found in part from the Highways Agency’s existing budget). However, transport spending is likely to be squeezed post-election (whoever is in power). Indeed the Chancellor has tasked Infrastructure UK to investigate cost of civil engineering works for major infrastructure projects in the UK.
Overall, figures for gross investment remained similar to those set out in the previous pre-budget report, up slightly to £69.9 billion. Net borrowing for 2010/11 was lower than previous predictions, at £167bn. The Institute of Fiscal Studies (IFS) have said that in order to meet its borrowing forecasts, the government would have to lower spending £46 billion by 2015. Indeed, this figure will be higher if UK economy does not match the government’s strong growth projections The Conservatives plan quicker, deeper spending cuts than Labour’s, whose own cuts would be equivalent to an 11.9% fall in central government spending, according to the IFS.
Reproduced with consent from the Glenigan subscriber newsletter - made available free of charge to CIMCIG members here - http://www.glenigan.com/newsletter2010/mar30th2010_custnews.asp#topic
