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Chancellor admits ‘roof had not been fixed when the sun was shining'

Chancellor of the Exchequer George Osborne outside 11 Downing Street before heading to the House of Commons to deliver his budget
Chancellor of the Exchequer George Osborne outside 11 Downing Street before heading to the House of Commons to deliver his budget Chancellor of the Exchequer George Osborne outside 11 Downing Street before heading to the House of Commons to deliver his budget

IT must have been hard for the chancellor to stand up and admit that the roof had not been fixed when the sun was shining. Despite recent economic growth, he confirmed that UK debt levels have risen further over the past six years. More bad news came when the economic growth and productivity forecasts from the Office for Budget Responsibility were revised downwards.

However, it should be noted that the forecast growth rate for the UK still remains fairly healthy at just over 2 per cent - although this rate is predicated on the UK staying in Europe. Rising debt levels have forced the chancellor to cut public spending by a further £3.5 billion a year from now until 2019/20 and without doubt Northern Ireland will feel the pain when it comes to reduced public spending plans.

In this budget the chancellor focused on a number of key areas. Reform of business tax was a main theme and he included more anti-avoidance measures. Commercial stamp duty will be reduced for lower value properties, corporation tax is to fall to 17 per cent by 2020, and the threshold for paying business rates in the UK has risen to £15,000 (much to the relief of many small firms).

In particular, the energy sector was singled out for extra support because it employs thousands of people across the UK and has been badly hit by low oil prices. Agriculture, however, saw little by way of support initiatives. The soft-drinks industry was singled out for a hammering as the chancellor set out sensible plans to tax fizzy drinks and force this industry to act more responsibly.

Households will be glad to see that they can continue to benefit from the current lower oil price as fuel duty remained frozen. However, they will start paying higher taxes on their insurance premiums and any tobacco consumption that they might indulge in.

The chancellor is keen for people to save, which is a little surprising given that economic growth at the moment is being driven by private consumption. Nonetheless, he has announced that the limit on tax-free savings in an ISA account is rising to £20,000 and he introduced of a 'New Lifetime Isa' for those under 40 years of age. The latter is designed as a government top-up scheme (of 25 per cent) for younger savers to encourage people to save for houses or pensions. The chancellor bowed out of his plans to make tax changes to pension contributions after widespread criticism in recent weeks.

Other areas important to Northern Ireland were not really on the agenda, such as skills and sectors such as manufacturing, tourism and the creative sector received no attention either. When it came specifically to Northern Ireland there was a brief “re-mention” of devolved corporation tax and the Coleraine Enterprise Park.

On a positive note though, the chancellor announced that an air ambulance service for Northern Ireland would be fully funded from the Libor fines and that is without doubt a positive move for the public here.

Overall small business, working households and savers were the winners today, but for non-working households and those that are dependent on public services there was not much to celebrate.

:: Angela McGowan is chief economist at Danske Bank in Northern Ireland