All you need to know about the most significant tax and spending announcement in a generation

ECONOMY

  • Growth predicted at 1.2 % this year, 2.3% next year, 2.8% in 2012, 2.9% in 2013 and 2.7% in both 2014 and in 2015
  • The UK will miss the previous government's 'golden rule' - borrowing only to invest over the economic cycle - in the current cycle by £485bn
  • Inflation set to reach 2.7% by the end of 2010. The inflation target remains at 2%, as measured by the Consumer Prices Index
  • Unemployment to peak this year at 8.1% and then fall for each of the next four years, to reach 6.1% in 2015
  • The structural current deficit should be in balance by 2015-16
  • The balance of spending cuts vs. tax rises would be 77% to 23%
  • Public sector net borrowing forecast at £149bn this year, £116bn next year, £89bn in 2012-13 and £60bn in 2013-14. By 2014-15 borrowing should reach £37bn, falling to £20bn in 2015-16
  • Current expenditure would be cut by an extra £30bn a year by 2014-15

BANKS

  • A levy on big banks from January 2011 to raise £2bn a year The French and Germans will join in the scheme

TAXES

  • VAT increased from 17.5% to 20%. Zero-rated items remain exempt
  • No increases in duty on tobacco, alcohol or cider
  • Council tax frozen for one year if councils keep spending down
  • Capital Gains Tax stays at 18% for lower-rate tax payers. 28% from midnight for higher earners
  • Income tax will not be paid on the first £7,475 of income. £10,000 is the target by the end of the Parliament

FAMILIES

  • Child benefit frozen for the next three years
  • Tax credits will be reduced for families earning over £40,000 next year
  • Housing Benefit capped at a maximum limit of £400 a week, to save £1.8bn a year by the end of the Parliament
  • A medical assessment for Disability Living Allowance from 2013 for new and existing claimants
  • Child tax increased by £150. Child poverty 'will not increase'
  • Pensions linked with earnings from April. Every year there will be in increase in line with earnings or a 2.5% increase - whichever is greater

BUSINESS

  • From April 2011, the threshold at which employers start to pay National Insurance will rise by £21 per week, above indexation
  • Tax relief for the video games industry will be scrapped
  • Corporation Tax will be cut next year to 27%, and by 1% annually for the next three years, until it reaches 24%. The small companies' tax rate will be cut to 20%

PUBLIC SECTOR

  • A two-year pay freeze for public sector workers, although 1.7 million of those earning less than £21,000 will get a flat pay-rise worth £250 in both years

SPENDING

  • The state accounts for almost half of all national income which is 'completely unsustainable'
  • Current expenditure would rise from £637bn in 2010-11 to £711bn in 2015-16 because of 'rapidly rising bill for debt interest'
  • No further reductions in capital spending totals in this Budget but there would be 'careful choices'. Projects with 'a significant economic return to the country' would be given priority

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