Main points from the British budget unveiled Wednesday

GROWTH: The British economy is likely to shrink by 3,5 per cent this year, though growth should start emerging by the end of the year, Darling said. For 2010 and 2011, Darling forecast growth of 1,25 per cent and 3,5 per cent – more optimistic than most independent economists.

BORROWING: Darling confirmed public finances will deteriorate dramatically this year, with borrowing rising to its highest level ever. Net borrowing is likely to hit 175 billion pounds in 2009-10, or 12 per cent of gross domestic product. In 2010-11, borrowing should decline only modestly to 173 billion pounds or 11,9 per cent of GDP. By 2013-14 borrowing should be 97 billion pounds, or 5,5 per cent of GDP.
DEBT: The country’s debt position, which aggregates borrowing through the years, is expected to rise to 59 per cent of gross domestic product in 2009-10, rising to a peak of 79 percent in 2013/14, Darling said. When the government came into office in 1997, it said one of its main economic policies was to keep debt around 40 percent. Darling defended the increase, saying to cut back now would worsen the recession.
BONDS: The government plans to issue a record 220 billion pounds worth of bonds in 2009-10. Some recent bond issues have met with limited demand, as the markets have taken fright at the scale of Britain’s borrowing.
TAXES: A sales tax cut to 15 per cent will be maintained until December, when it will return to 17,5 per cent. Darling also raised the income tax level on those earning 150 000 pounds or more to 50 per cent from April 2010. Alcohol and tobacco duties will increase by two per cent. Darling said the increases would raise more than six billion pounds by 2012
HOUSING: Darling said the government will spend 600 million pounds to build more homes and will extend a tax holiday on sales of houses costing up to 175 000 pounds until the year end.
– Nampa-AP