Budget 2012

George Osborne hopes 'tax cut' can propagate shoots of recovery

Chancellor expected to raise income tax allowance to £9,000 as forecasters predict slight increase in Britain's economic growth

Only one in five business leaders detects "green shoots" in the economy, according to a ComRes survey for The Independent.

While 21 per cent believe their own sector is growing, a bigger proportion (31 per cent) think it is still contracting, while 42 per cent say it is staying the same.

The picture of a flatlining economy will be underlined in the Budget today. But there may also be some cautiously optimistic news for George Osborne. The independent Office for Budget Responsibility is likely to raise its forecast last November that the economy will grow by 0.7 per cent this year to 0.8 per cent. Although hardly a cause for celebration, that would mean Britain avoids a double dip recession that would have called into question the Chancellor's economic strategy.

Today, Mr Osborne will argue that his deficit-reduction strategy is working and insist he is sticking firmly to it. The centrepiece of his third Budget will be what he will call a tax cut for millions of working people –by raising the amount they can earn before paying tax. He is expected to raise the personal tax allowance, which will be worth £8,105 next month, to around £9,000 from April next year. The estimated £4.5bn cost will be the biggest single item of new spending in the Budget and a significant "win" for the Liberal Democrats, who are within sight of achieving the £10,000 threshold promised in their last election manifesto.

Although he will have little money to play with, Mr Osborne will spell out a series of reforms to boost growth and "help Britain pay its way in the world". The aim is to answer criticism that the Government has a "cuts strategy" but no "growth strategy".

The Chancellor will take a huge political gamble by cutting the 50p tax rate on incomes above £150,000 a year to 45p from April next year. He is likely to find some money to soften the blow for middle-income earners from his decision to withdraw child benefit from taxpayers on the 40p higher rate from next January. Business is likely to benefit from a further cut in corporation tax, which has already been reduced from 28 to 25 per cent since the last election.

Despite the absence of many "green shoots", the ComRes survey of 121 business leaders makes grim reading for Labour. Some 69 per cent of them have confidence in David Cameron and 64 per cent in Mr Osborne. In contrast, a derisory 8 per cent have confidence in Ed Miliband and 19 per cent in Ed Balls, the Shadow Chancellor.

Liberal Democrat figures score more highly than the Labour economic team. Some 50 per cent of business leaders have confidence in Vince Cable, the Business Secretary, and 26 per cent in Nick Clegg, the Deputy Prime Minister.

The findings will reinforce fears among some Labour MPs that Mr Miliband's calls for a more "responsible capitalism" and attacks on "predators" have alienated the business world. Labour has launched a charm offensive in the hope of reassuring it that the party is not "anti-business".

A separate ComRes survey of 154 MPs from all parties suggests that Conservatives are becoming slightly more optimistic about Britain's prospects. Some 71 per cent of Tory MPs believe the economy will grow over the next year, as do 72 per cent of Liberal Democrat MPs. But only seven per cent of Labour MPs agree, with 50 per cent saying it will get worse and 40 per cent believing it will stay the same.

However, Tory MPs are more pessimistic about unemployment: 53 per cent think it will rise during the next 12 months and only 25 per cent think it will fall. Some 43 per cent of Liberal Democrat MPs think the jobless figures will get worse and 32 per cent think they will get better. Labour MPs are very gloomy: 95 per cent think unemployment will rise.

Labour is frustrated that the run-up to the Budget has been dominated by public wrangling between the Coalition parties over tax. Mr Balls has called that a "distraction" from the most important issues of jobs and growth.

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SAP Project Manager

competitive: Progressive Recruitment: SAP PROJECT MANAGER - 3 MONTHS - BERKSHI...

SAP Project Manager

competitive: Progressive Recruitment: SAP PROJECT MANAGER - 3 MONTHS - BERKSHI...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Microsoft Dynamics AX Functional Consultant

£65000 - £75000 per annum + benefits: Progressive Recruitment: A rare opportun...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star