Economic forecasts

Government expects to meet its fiscal rules in this economic cycle and the next.

Growth This year’s annual growth is expected to be higher than previously forecast at 2.75 per cent. Next year the economy is expected to grow by between 2.75 per cent and 3.25 per cent.

Public borrowing Total net borrowing to fall from £37bn this year to £31bn, then £27bn, £26bn, £24bn, £22bn in subsequent years meeting fiscal rules. This represents a decline from 2.3 per cent of national income next year to 1.3 per cent by 2011-12.

Deficit Net debt will be 37.5 per cent of national income this year, then 38.2 per cent, 38.6 per cent, 38.7 per cent, 38.7 per cent and 38.5 per cent in 2011 - below the 40 per cent ceiling.

Public debt Deficit this year will be £15bn, then £8bn next year and £1bn the following year. Surpluses for the following years will be £4bn, £7bn, £10bn, £14bn.

Inflation Price rises will fall back to 2 per cent target level by mid-2007 and will remain at target in 2008.


Spending review for the years to 2011 based on planned capital investment rising from £39bn last year to £60bn in 2011/12.

Capital spending in infrastructure to rise to £60bn from £39bn by 2011/12.

Investment over the next 5 years to total £48bn next year, £51bn in 2008, £54bn in 2009, £57bn in 2010 and £60bn in 2011.

Investment in transport up to £9.6bn next year from £4bn in 1997.


Net efficiency savings of 3 per cent per year from overall budgets agreed with Secretaries of State.

Administration budgets at government departments to be reduced by 5 per cent per year.

Government spending cuts to release £26bn per year by 2011 for spending priorities on frontline services.

Financial barriers to the disposal of surplus government assets to be removed.

Sale of surplus government land and buildings to raise £30bn.


Universities to be given £60m for new research and development with commercial potential. Universities represent the “most useful and fruitful” areas for new scientific research.

Target set for 90 per cent of UK adults to achieve the equivalent of 5 GCSEs by 2020. Number of adults achieving ‘A-Level’ equivalent skills to double from 2 million to 4 million.

Introduction of Around Education Maintenance Allowances to provide an “earn to learn” programme for people to gain graduate qualifications while still working part-time.

New summer school universities will be offered to encourage people to stay on in education.

Consultation on a new entry path to university allowing children to volunteer in order to reduce tuition fees.

Capital investment in education will be £8.3bn next year from £1.5bn in 1997.

Capital investment in education in England will be up to £10.2bn by 2010.

Spending in state schools to match public school spending per pupil by 2010

Direct grants to primary school headteachers to be increased to £50,000 from £39,000 this year, up to £200,000 from £150,000 this year for secondary schools.

“Every Child a Reader” programme to be extended nationwide.

The chancellor says all children starting primary school and secondary school to receive free books to encourage reading - 3 million free books in total.

Spending on schools by 2011 up to £10.2bn from £1.5bn in 1997.

Education to be main spending priority.


Market mechanisms and incentives to be used to work towards global carbon trading.

London should be the world’s main centre for carbon emissions trading.

31 countries signed up to emissions trading as laid out by the Stern report.

Brown announces partnership with Norway to improve infrastructure for carbon capture and storage under the North Sea.

Carbon emission from houses, representing 30 per cent of total emissions, to be cut over the next 10 years by making every new home a carbon zero home.

Vast majority of new “Carbon Zero” homes to be exempt from stamp duty.

By the end of 2008, 2.7m more homes will have been insulated.

20p per litre fuel duty discount extended to next generation of bio-diesel fuels and new innovative fuels.

Personal Finance

Tax free incentives on individual savings accounts to be extended beyond 2010 and made permanent.

Voluntary sector

Brown proposes more funding for the voluntary sector. Voluntary sector funding to be extended from one year to three.

Government to set up £30m fund to encourage local authorities to work with the voluntary sector and expand ownership of community assets.


Military operations given additional £600m for Afghanistan and Iraq. At home counter terrorism efforts are to get an additional £84m.


In addition to basic pension, Mr Brown announces help to pay pensioners’ heating bills - subsidy to go up from £5 to £7.65.

Free insulation and central heating to be provided for pensioners.

Child Benefit

Child benefits to rise to £64 a week from £28 in 1997. Child benefit will also be paid from the 29th week of pregnancy.


New independent body to take strategic decisions on major infrastructure projects. New brownfield sites set aside to develop 130,000 new homes.

Gordon Brown says investment in housing will be up to almost £8bn next year from £2bn in 1997.

Minimum wage

Minimum wage enforcement to be prioritised with extra £9m of spending from January.

Air Travel

Gordon Brown says air passenger duty to be doubled to £10 from February in a bid to combat aircraft emissions.


Petrol to rise by 1.25p from midnight in line with inflation, but a real terms increase in fuel duty rejected.

Extension of 20p per litre discount to include next generation of bio-diesel fuels.


Sir Digby Jones, former director general of the CBI, confirmed as new skills envoy, charged with improving the provision of workplace training.

Number of apprenticeships to double in the next 15 years to 500,000.

Intellectual property

Penalties for copying and piracy to be tightened as part of the review of intellectual property rights. Individuals to be given new rights to make copies of music and films for personal use.

International development

International development secretary setting up a new committee bringing together researchers and charities such as the Gates Foundation and the Welcome Foundation to pool research into international development issues.

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