Summer Budget 2015 – economic overview

Economic overview

The UK economic recovery continues at the fastest rate in the G20 countries.

Aided by the Office for Budget Responsibility, revised forecasts show the following:

  • UK grew by 3% in 2014; growth expected at 2.4% until 2019/20
  • Unemployment to fall to 5.4% in 2015, down from 6.2% in 2014
  • Public sector net borrowing to fall from the current £69.2bn to a surplus of £10bn in 2019/20, with elimination of the deficit
  • Inflation expected to rise from 0.1% this year, to 2% in 2020 (Consumer Prices Inflation)

The changes intended to stimulate investment, such as increasing the AIA, and incentives to employers should in theory aid the recovery quicker. We already knew about the changes to childcare, providing extra help for working parents.

One surprise announcement was the reduction in the rate of corporation tax, to 18% in 2020, allowing the Chancellor to boast of the UK’s unrivalled competitiveness in this area.

There will be many critics arguing that the cuts to welfare and various government departments are too severe which the Chancellor responded to by slowing the pace of cuts, whilst reassuring us that the most vulnerable and in need would still receive the support they required.

Much work is still to be done in reducing the deficit although today’s figures show that progress is being made in reversing the borrowing levels of recent years.

We welcome the measures to help boost investment, particularly the increase in Annual Investment Allowance to £200,000 and the employment allowance..