Chancellor sets out upbeat picture of economy

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Chancellor Gordon Brown set out an upbeat picture of the prospects for the economy as he prepared for an expected general election next year, and detailed a range a measures aimed at families.

Chancellor Gordon Brown set out an upbeat picture of the prospects for the economy as he prepared for an expected general election next year, and detailed a range a measures aimed at families.

Economy

* The Chancellor said the core of the report was a Britain of long term economic strength and stability. His aim was to create a Britain that leads the world in hi-tech jobs, enterprise and the best educated and flexible workforce.

* Growth this year would be as forecast at 3.25% - the longest period of sustained growth in Britain's industrial history.

The Golden Rule is being met in this economic cycle by a margin of £8 billion and will be met in the next cycle. The sustainable investment rule is being met by a margin of £59 billion, with debt as a proportion of national income at 34.3% and remaining below 37% over the next four years.

* Borrowing next year £1 billion more than forecast, at £34 billion, falling back to £33 billion, £29 billion, £28 billion, £24 billion and £22 billion in the following years.

* Inflation expected to be 1.75% next year and 2% in 2007.

* Business investment would rise by 4 to 4.5 per cent next year.

* Domestic consumption to grow by 3.25% this year and 2.25% to 2.75% in 2005. Overall domestic investment to grow by 6.75% to 7.25% next year.

UK deficit as a proportion of GDP is 2.9% for 2004 - lower than Germany, France, US and Japan - and will fall to 1.5% in five years.

Families

* Maternity leave to be transferable from mothers to fathers. Paid maternity leave extended to nine months by April 2007 with aim of giving mothers whole year of paid leave in future. The maximum maternity pay and child benefits for new mothers will rise to £8,300 in April 2007.

* Free nursery education for three and four-year-olds extended to 15 hours a week from April 2007.

* Single parents to get £40 per week to return to work. The National Minimum Income Guarantee for single parents with one child will rise to £258 a week. New moves announced to bring single parents and disabled people back into the workforce.

* A £120 million fund is to be set up to tackle financial exclusion and banks are to work with the Government to halve the number of families without bank accounts.

* Child Trust Funds are to be increased so that the £250 and £500 downpayments at birth will be doubled at seven years old.

* From April employers will be able to offer staff £50 a week extra for child care free of tax and national insurance.

* Child care tax credits will rise for those on lower and middle incomes, covering up to 80% of costs up to £175 a week for the first child and £300 for two or more children.

General

* Winter fuel payments will rise by £50 for the over-70s to £250 and to £350 for over-80s.

* New funds are to be allocated to keep schools open from 8am to 6pm.

* Mr Brown announced an extra £105 million for security and counter-terrorism.

* £2 billion savings from procurement with around £330 million savings from NHS drug procurement.

* Plans for further relocation of civil servants outside London including 1,230 from the Ministry of Defence to Yorkshire and 600 from the ONS to Wales.

* A new taskforce is being set up to boost investment in Asia. Extra help to fight AIDS in Africa.

* Main road fuel duties are to be frozen.

* Package of support for science includes naming of Manchester, Newcastle and York as science cities for the North.

* Clampdown on tax avoidance schemes including abuse of film tax legislation.

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