Experts analyse budget details

ECONOMISTS and business analysts from across the country were today still trying to work out all the details of Gordon Brown's final eye-catching budget.

ECONOMISTS and business analysts from across the country were today still trying to work out all the details of Gordon Brown's final eye-catching budget.

His lowering of the basic rate of income tax might not happen until next year, but his promise of more money for health, education, and defence comes into effect immediately.

Once economists started hammering on their calculators it emerged that the drop in the basic rate of income tax by 2p to 20p in the pound will almost all be clawed back by the abolition of the starting 10p tax rate.

In fact some low-income families could be left worse off unless they re-apply for complex tax credits.

There is a suspicion that further tax rises will emerge over the next few weeks - over the last ten years Mr Brown has earned a reputation for announcing only the good points in his budget speeches, more unpalatable news emerges once journalists and economists start poring over the final details in the budget documents.

Cuts in income tax and corporation tax were welcomed by unions and workers alike today but small businesses accused the Chancellor of a "smoke and mirrors" Budget.

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News of the cut in basic rate of income tax came as a surprise right at the end of Gordon Brown's speech.

TUC General Secretary Brendan Barber said: "This was a bold budget, wide in scope, that says much about both Gordon Brown's successful ten year stewardship of the economy and his plans for the future.

"There is much to welcome including higher spending on health and education, action on the environment, help for those with children and for pensioner tax payers.

“His decision to cut income tax will grab headlines, but it will take more analysis to determine its impact on low and middle earners.”

Many businesses welcomed the fact that Mr Brown cut corporation tax from 30pc to 28pc, but it later emerged that the level of tax on small companies is going up from 20pc to 22pc.

The Forum of Private Business said the Chancellor's budget was all about politics manoeuvring and only created more bureaucracy.

Chairman Nick Goulding said: "The Chancellor has used smoke and mirrors to disguise the fact that there is nothing in this budget to support small businesses.”

Many experts are concerned that the budget calculations rely heavily on the continued expansion of the British economy over the next few years.

Mr Brown said that it would continue to expand at between 2.5 and 3 pc each year until 2009/10, but if those comparatively high growth levels are missed, public finances could get into a mess.

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