Chancellor George Osborne’s sixth and possibly last Budget announcement today is expected to include measures that will boost his party’s election chances and bring clarity to the pensions reforms.
Roger Bootle and Jonathan Loynes, economists at Capital Economics, said “this Budget could see a major loosening of fiscal plans”.
They added that Mr Osborne “may want to pare back the extreme spending cuts” in order to “counter claims he is only cutting public spending for the sake of it”.
Simon Blowey, divisional director of financial planning at Brewin Dolphin agreed.
“Lower borrowing costs, higher tax receipts, spending cuts and better forecasted long term surpluses in the public finances will allow Mr Osborne to create a politically mischievous list of giveaways to take the wind out of his opponent’s sails,” he said.
Mr Blowey predicted the top rate of tax would be reduced from 45 per cent to 40 per cent.
The chancellor is also expected to raise the minimum level at which people start paying national insurance. This would essentially be a tax cut for every taxpayer.
Other issues expected to be dealt with at this Budget is the shortage of affordable homes and ways to support technology start-up companies.
It is also widely reported that the Government will launch a consultation in the Budget to allow people to sell their annuities.
While these changes are expected to be made, David Page, economist for Axa Investment Managers, thinks the measure of deficit is likely to be unchanged and “thus see no major revision to planned gilt issuance”.
Another bug bear of the Budget is the UK Finance Bill 2015, which Elizabeth Stone, asset management partner at PwC, expects a revision to.
At the moment the Bill seeks to prevent the amount received by individuals directly or indirectly out of management fee income not being fully taxed as income.
Ms Stone noted that the current draft has presented confusion and “further clarity and guidance on what specifically they [the HMRC] want to achieve” is needed.