GEORGE OSBORNE’S 2014 budget was celebrated by the drinks industry yesterday as he announced cuts to the cost of beer and a freeze on the duty of cider and spirits.
Osborne scrapped the alcohol escalator on wine and spirits, which since 2008 had added an extra 2% plus inflation to prices, and reduced the price of beer by a penny. The Chancellor said that the cuts to the price of drinks would save more pubs and create more jobs, especially in the West Country where the cider industry was affected by the recent flooding and is vital for the rural economy. An extra £140 million has also been assigned for flood defences and the victims of the winter storms.
However, a bottle of wine will now cost an extra 5p and smokers will feel the pinch due to a rise on tobacco duty by 2%, adding an extra 28p to the price of a packet of cigarettes.
The chancellor stated that the measures have been introduced to keep the economic recovery on track, of which is now expected to grow by 2.7%, 0.3% higher than the previously predicted 2.4% set out last December. He stated that, “The forecasts I have presented show growth up, jobs up and deficit down”.
Osborne announced he wanted to help businesses compete against overseas industries by introducing a £7bn package to cut the energy bills of British manufactures. As part of this the carbon tax charged to the biggest CO2 emitters will be frozen from 2016 at £18 a tonne for ten years. On average this will leave manufacturing companies £50,000 better off every year. However, many environmentalist groups think the Chancellor is neglecting the UK’s climate change agenda. The carbon price floor was set to increase between 2013 and 2030 by over £50 but with the new budget companies may be less motivated to reduce their emissions.
The plans to increase fuel duty in September have now been scrapped and Osborne confirmed that the duty would remain frozen until Spring 2015. Motorist have welcomes the cancellation but no investment into alternative, greener, transport was mentioned.
Looking to the future, the economy is set to increase by 2.3% in 2015 and 2.6% in 2016 and 2017.
The budget at a glance:
• £7bn cut from energy bills for manufacturers
• Workers will not have to pay income tax until they have earned £10,500
• The planned raise to the price of petrol in September has been cancelled
• The limit for tax-free saving is to be raised from £11,520 to £15,000
• Investment allowance for businesses has increased by £250,000 and extended to the end of 2015
• The amount spent on welfare will be capped at £119bn for 2015/2016
• A quarter of the pension pot remains tax-free on retirement and people can now take out up to £30,000 as a lump sum
• Pensioner saving bonds will be launched