Chancellor says UK growth "on-target" at 2.25 per cent

In his pre-Budget spending statement, the Chancellor Gordon Brown today said he remained "cautiously optimistic" about prospects for the British economy, forecasting growth of 2-2.5 per cent in 2002 and 2.75-3.25 per cent in 2003.

Pointing to the recession that has already hit the US and Japan, and is widely expected to further endanger other economies, Mr Brown compared the expected UK growth rate of 2.25 per cent with worse figures elsewhere among G7 countries. He also ouotlined a raft of new tax measures intended to boost British manufacturing.

The figure for British manufacturing output he gave was down 2 per cent this year, compared to a rise of 2 per cent in 2000.

These included a new research and development tax credit in next year's Finance Bill and a £50 million fund to help small firms access the risk capital necessary for expansion.

Mr Brown said that the 10p band of Corporation Tax would be extended to help small businesses and a simplified flat rate VAT regime would also be introduced, to save a typical small business £1,000 a year. He continued that capital gains tax would be set at 20 per cent for assets held for a year and 10 per cent for those held for two. He would also seek to expand the reach of employee share ownership schemes to include small businesses.

To help the slowest growing areas, Mr Brown announced that in 2000 wards across the country for all property transactions for homes and business properties worth up to £150,000 stamp duty would be abolished as of Friday. These wards would be in the "slowest-moving" areas in the country.