Autumn Statement Preview 2014

Last year, George Osborne took to the micro-blogging site Twitter to announce his Autumn Statement. Sadly, there was no mention of this year’s speech on the Chancellor’s social media account, but we do know it will be on Wednesday December 3rd and if he follows last year, Mr Osborne will be on his feet around noon.

Before we look at what we can expect in the Autumn Statement, let’s first look at some of the background to it: the picture is rather murkier – and perhaps less optimistic – than it was last year.

First of all there is a General Election just around the corner: the next Election will be held on May 7th 2015. Traditionally, that would mean a Chancellor of the Exchequer gearing up for a raft of tax giveaways in the Autumn Statement and in the March Budget. We doubt that will be the case this time.

The central theme running through George Osborne’s period as Chancellor has been deficit reduction – and it’s unlikely that he’ll give up on that now. Generally speaking, Osborne’s time as Chancellor has been viewed favourably in the financial markets: the recent IMF report which was critical of many countries and spoke of an ‘uneven’ recovery in global markets, was full of praise for the UK. Osborne is unlikely to throw that reputation away.

Besides, his hands are tied. As he said when speaking to the BBC after the IMF published its report, “The UK is not immune to what is happening on the continent”. What is happening is a serious slowdown, with even the German economy recently reporting a fall in output.

UK growth is generally expected to be 3.1% this year. However, a recent report from the Ernst & Young Item Club has forecast a fall to 2.4% next year. The Chancellor has also found himself faced with falling tax revenues: most of the new jobs that are being created are low paid jobs, and more people are becoming self-employed.

Throw in the political uncertainty from the Scottish referendum result and the rise of UKIP and George Osborne’s room for manoeuvre is limited. He appears to have already told his Cabinet colleagues that there is no money for extravagant giveaways, and the rest of us can expect to receive the same message on December 3rd.

So what can we expect? After all, this is the Chancellor who gave us “the most radical reforms to pensions for a hundred years” and totally re-wrote the rules on Individual Savings Accounts. Despite the limits he has to work with, we can still expect George Osborne to pull at least one rabbit out of the hat.

It might well be another re-writing of the ISA rules – or a new type of ISA – designed to encourage peer-to-peer lending. Start-ups and small businesses are still struggling to find capital from conventional sources. Not surprisingly, there are now an increasing number of sites appearing on the web allowing businesses to ‘crowdfund’ – to raise money from the general public. There are suggestions that the Chancellor may officially recognise this trend and the help it is giving to emerging businesses and take steps to encourage this lending by the general public.

For more established businesses, there are strong suggestions – not least from Business Secretary Vince Cable – that there will be steps taken to hand small businesses rate relief. They should expect something “positive in the pipeline in the Autumn Statement” according to Mr. Cable. This may well be linked with moves to encourage investment in UK high streets, which continue to struggle.

After the pensions changes were announced in the March Budget, Pensions Minister, Steve Webb, glibly announced that the Government, “wouldn’t be bothered” if people used their pension pots to buy a Lamborghini. George Osborne seems inclined to trust the good sense of the British people, but don’t be surprised if there is further tinkering with the pensions rules. Now the dust has settled, there are suggestions that the new rules have created some loopholes which the Chancellor may be keen to close.

He’ll also continue with his wider crackdown on tax evasion, although as the Daily Telegraph recently commented, digital companies operating in several countries are increasingly needing “international, not local” taxation systems.
Finally, expect the Chancellor to take further steps to address the skills shortage in British industry. In a recent study by the accountants Grant Thornton, 40% of UK businesses identified skills shortages as their biggest problem, with a significant number saying that a reduction in national insurance contributions would make them more likely to take on apprentices. A move in this direction would come as no surprise.

Whatever other surprises the Chancellor comes up with on December 3rd will be covered in our Autumn Statement Bulletin. As last year, we’ll be preparing this as the Chancellor is speaking and we’ll be working into the evening – so we’d expect the Bulletin to be available to our clients the following day.

Stock Market Falls – October 2014

On 3rd September this year, the FTSE 100 index briefly touched 6,898.62: this was within 52 points of the all-time high of 6,950 reached in the final trading session of 1999.

Since then the FTSE has fallen significantly. At the time of writing this update, it stands at 6,247 – down more than 500 points (over 9%) from September 3rd.

Not surprisingly, many clients are worried by this and have asked us why the fall has been so sudden and so dramatic.

We therefore thought it would be useful to set out some notes explaining the fall and trying to put it into context. Hopefully, this will reassure our clients, but as always if you have any further questions, please don’t hesitate to get in touch with us.

Perhaps the first thing to say is that the FTSE is not alone: the major stock markets in Europe have also fallen, as have stock markets around the world. As you’ll see below, the UK is doing well compared to other economies: but these days we live in a global market and the UK stock market is as much affected by events overseas as it is by what’s happening at home.

The rise in the UK and European stock markets on September 3rd was on hopes of a ceasefire in the Ukraine conflict. True enough, there is now an uneasy truce in the region (with Vladimir Putin taking time off from the Russian Grand Prix to order his troops to pull back from the Ukrainian border) – but as the dust has settled in the Ukraine, so the focus of world discontent has moved elsewhere. Several events have happened at once and this has created a lot of uncertainty; the one thing stock markets dislike above all others.

First of all the UK – along with a host of partners – is now committed to taking action against the Islamic State (IS). As you’ll know if you have seen the news recently, the coalition partners are currently relying on air strikes as the battle rages for the strategically important town of Kobani. What’s already becoming clear is that the battle against IS will not be over quickly – military strategists are already talking of ‘years not months’ – and markets are naturally worrying about the cost of a sustained conflict.

Sometimes, though, stock markets do overreact to military situations. Many of you will remember a day in the Second Gulf War (fought in 2003) when our tanks became ‘stuck in the desert.’ The media claimed they’d be there throughout the summer, with troops facing temperatures in excess of 50 degrees and the war dragging on indefinitely. The stock market duly dropped to just above the 3,000 level. As we now know, Baghdad fell to US forces on April 9th – and in hindsight ‘the day the tanks got stuck’ was a superb buying opportunity.

While the war on IS has been the headline news, less well reported – but of more significance to global stock markets – was a very downbeat assessment of the world economic outlook from the International Monetary Fund. The report was published at the beginning of October, with the IMF cutting its forecasts for global economic growth which, it warned, would be “weak and uneven.”

Chief IMF economist, Olivier Blanchard, warned that the recovery was becoming “more country specific.” This was good news for the UK, where the IMF remained positive, but there were sharp downgrades for Russia, the Middle East, Japan and the Eurozone.

Speaking to the BBC, George Osborne had warned that the UK economy was bound to be affected by the slowdown in Europe. “The UK,” he said, “is not immune to what is happening on the continent.” As we’ve reported in our regular monthly bulletins, there have been fears about the Eurozone stagnating for some time, and matters were made worse by German industrial output falling sharply in August (although this was partially explained by late school holidays which impacted on factory output).

Markets in the Far East have also been unnerved by the clashes over the planned elections in Hong Kong and the IMF’s warnings about the global economy – with the Japanese index falling by 1.4% on the day the IMF report was published.

All in all therefore, there has been a lot of global uncertainty – and as we mentioned earlier, the one thing stock markets crave is certainty. When you throw in the political uncertainty at home following the Scottish referendum and Clacton by-election results, it is little wonder that the FTSE is down, and down significantly in the short-term.

However, it is important to remember that investing is a long-term proposition – and all the investments and savings of our clients are part of carefully-considered long-term financial planning strategies.

If you have any further questions or queries, please do not hesitate to get in touch.

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Sources: Osborne warns of UK slowdown due to Eurozone woes http://www.bbc.co.uk/news/business-29551541 IMF (8/10) says recovery is weak and uneven. Sharp downgrades for Russia, Middle East, Japan and the Eurozonehttp://www.bbc.co.uk/news/business-29520881 But postive on Britain (to the delight of the more patriotic tabloids and UKIP) Chief economist Olivier Blanchard said “The recovery is becoming more country specific.” Asian stocks reacted badly to the news with Japan’s Nikkei Dow index falling 1.4% http://www.bbc.co.uk/news/business-29531859 Beginning of month 1/10 Q2 growth revised upwards to 0.9% http://www.bbc.co.uk/news/business-29422267 Fears of recession grow stronger as German output falls due to later school holidays – was expected to fall 1.5% but down 4% - biggest drop since January 2009 http://www.cityam.com/1412664596/german-industrial-productions-suffers-biggest-drop-since-january-2009

Important pension notice: 55% ‘death tax’ abolished

Ahead of the major pension changes already announced for April 2015, the Chancellor, George Osborne, this week announced another shift in pension policy that could have a big impact on many savers and their financial planning requirements.

Speaking at the Conservative Party’s Annual Conference, Mr Osborne announced the abolition of a so-called ‘death tax’, which can see any pension remaining on death taxed at a rate of 55%, before it is passed on to a beneficiary. The change, as with the other changes to pensions already announced, will be introduced from April next year.

The 55% tax is already waived when pension savings are passed to a spouse or a financially dependent child under the age of 23. The government estimates that the new change announced by Mr Osborne will impact an extra 320,000 people outside of the above groups. The details of the changes revealed different permutations for beneficiaries depending on how old the pension holder is at the time of their death.

• If the deceased is 75 or over, beneficiaries will pay only their marginal rate of income tax, with no limit on how much of the pension fund can be accessed at any one time.
• If the deceased is under 75, access to the pension fund will be tax free, including situations where the pension has already entered drawdown.

The proposal only impacts defined contribution pensions, although there may be new options to consider for individuals in final salary schemes. Similarly, the vast majority of the 320,000 people per year the government estimates this change will benefit will be individuals already in retirement. For those who pass away having not yet started to access their pensions, passing on savings to a beneficiary is a simpler affair, as your pension is counted as being outside of your estate for tax purposes.

The change has been seen by many as a continuation of the changes announced by Mr Osborne during March’s Budget. During that announcement, the Chancellor effectively abolished the need for savers to rely on an annuity in retirement, a device which could also see a portion of pension savings effectively wasted, when it comes time to pass on your estate to your family. The new taxation system announced this week effectively aligns the taxing of pension savings on death with the new approach to pensions which is due to become active in April 2015.

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Sources: George Osborne Conservative Party Conference speech (29/09/14), http://www.theguardian.com/money/2014/sep/29/who-benefits-abolition-55-percent-tax-pensions, http://www.bbc.co.uk/news/uk-politics-29402844

Understanding Active vs Passive investment strategies

The debate about whether a passive or an active investment strategy produces a better return for investors is one that has rumbled amongst financial planners for as long as passive strategies have been in existence. For you as a client, the method favoured by your adviser can have a major impact on your investment experience, so understanding the two different approaches is important.

An active strategy is one in which the investor – possibly a fund manager or other investment professional – will make investment choices on a regular basis, buying or selling holdings when they think it is necessary, often when they believe they can make a peak profit. An active strategy is highly involved and requires constant management.

A passive strategy meanwhile is one which requires hardly any trading whatsoever. Instead, money is invested into funds linked to indexes, such as the FTSE 100, by way of just one of many possible examples. Relying on the market to make your gain, passive investing is typically seen as a longer term strategy and, although it may sound easier than active from a management point of view, there is still a lot to do in terms of selecting the right funds and creating a well-balanced portfolio of asset classes that meet client’s needs.

On the active side, proponents claim that such a strategy is the only way to generate better-than-average returns; the only way to ‘beat the market’. After all, passive strategies, though divested across indexes and asset classes, are by their very design market-linked. If the index your passive strategy invests in goes up, so will your investments, with the negative being true if the index falls. Your investment may never outperform the market but it will also never lose more than the market as a whole.

Passive proponents, meanwhile, point out that active investment strategies typically cost more in fees, with these fees potentially impacting on the ability of the strategy to produce a better return. Those who favour passive investments also point out the increased volatility of active strategies, stemming from the higher frequency of investment movements and the timing of those movements, which also produce the potential for market-beating gains

Scotland has decided!

The voting is done and Scotland has decided. It is now understood that further constitutional change will happen following the clear result of the referendum.  HK Wealth will consider the implications of these changes in due course for our clients and the implications for their ongoing financial planning. 

Budget 2014: How the Pensions System changed forever

Following the Budget statement in March, the Government has unveiled plans to completely overhaul the UK’s current pension system.

From April 2015, from age 55, whatever the size of a person’s defined contribution pension pot, the Government proposes that they’ll be able to take it however they want, subject to their marginal rate of income tax in that year. 25% of their pot will remain tax-free and individuals will benefit from increased flexibility. People who continue to want the security of an annuity will be able to purchase one and people who want greater control over their finances can drawdown their pension as they see fit. Those who want to keep their pension invested and drawdown from it over time will be able to do so.

The current system is much less flexible for savers when they come to access their defined contribution pension during their retirement. Savers are currently charged 55% tax if they withdraw the whole pot and three quarters of people currently have little option but to buy an annuity – an insurance product where a fixed sum of money is paid to someone each year, typically for the rest of their life. A ‘capped drawdown’ pension allows you to take income from your pension, but there is a maximum amount you can withdraw each year. With ‘flexible drawdown’ there’s no limit on the amount you can draw from your pot each year, but, using the previous rules you must have a guaranteed income of more than £20k per year in retirement to trigger this option. The one exception granted was for small pension pots, where savers aged 60 and over and with an overall pension saving of less than £18k could take their entire fund in one lump sum.

The Treasury states that the Government has already helped to increase the security of people’s income in retirement by introducing automatic enrolment into workplace pensions and the triple lock guarantee. Ahead of the changes in April 2015, the following further changes have been introduced as of March 27th 2014:

• The amount of overall pension wealth you can take as a lump sum has increased from £18k to £30k. The amount of guaranteed income needed in retirement to access flexible drawdown has reduced from £20k per year to £12k per year.
• The maximum amount you can take out each year from a capped drawdown arrangement has increased from 120% to 150% of an equivalent annuity.
• The size of a small pension pot that you can take as a lump sum, regardless of your total pension wealth, has been increased from £2k to £10k.
• The number of personal pension pots you can take as a lump sum under the small pot rules has increased from two to three.

If you would like to discuss how the new pension rules might influence you and the different ways in which you could now choose to take your pension income, then please do feel free to get in touch, at which point we will be more than happy to discuss your individual situation and how you could best enjoy your retirement!

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Sources: gov.uk

Scottish Independence: What would it mean for business and your investments?

Scottish Independence: What would it mean for business and your investments?

Even if you live in a cave on top of a mountain a very long way from anywhere, it won’t have escaped your attention that the referendum on Scottish independence is drawing inexorably closer.

Voting will take place on September 18th – little more than five months from now – and at the moment the indications are that the ‘no’ camp will prevail. That said, the bookmakers will only give you 3/1 against a ‘yes’ vote, with the opinion polls currently suggesting around 45% of the votes will be cast in favour of independence.

At the moment, therefore, a ‘yes’ vote appears unlikely but very far from impossible. Rightly, many of our clients have asked what the implications of an independent Scotland would be for their savings and investments – and the wider economic prospects of the country. The notes below reflect our current thinking: we’ve tried to answer the questions clients are most often asking us. However, they are necessarily general in tone – if you would like to have a more specific discussion, please don’t hesitate to contact us.

Would an independent Scotland keep the pound?

The ‘yes’ campaign would like to, with John Swinney, the Scottish finance secretary, arguing that the benefits of a currency union are “clear for both sides.” However, George Osborne has specifically ruled out a currency union with an independent Scotland and at the moment is supported in this by all parties at Westminster.
In practice, a currency union would be very difficult. After independence, the economies of Scotland and the rest of the UK are likely to diverge. For example, Scotland would be a major oil exporter while the UK would continue as an importer. And if currency union did go ahead, clearly it would be under the control of the Bank of England – with the rest of the UK ten times the size of Scotland, there is little doubt where priorities would lie.

What would be the impact on business?

Clearly, the UK is Scotland’s biggest market and Business Secretary Vince Cable is fairly specific on the threats independence would pose. “Breaking up Scotland’s most lucrative market would potentially put growth and jobs at risk.” The ‘yes’ campaign dismiss this as ‘scaremongering’ but there is little doubt that business would be affected by a vote for independence. The impossible question to answer is ‘how much?’

There is clearly the potential for significant differences between an independent Scotland and the rest of the UK: regulations, employment law and the tax regime would all be different. Different businesses would be affected in different ways and the simple answer at the moment is that nobody knows who the winners and losers would be.

Would businesses leave Scotland?

Quite possibly. Again, it is difficult to estimate accurately and much would depend on factors such as the regulatory framework and taxation regime in an independent Scotland, but inevitably some companies would want to operate under UK law. Standard Life – which employs 5,000 people in Scotland – has warned that it could relocate, and is believed to have already set up subsidiary English companies in case it made such a move.

Royal Bank of Scotland has also voiced concerns, suggesting that an independent Scotland could damage its credit rating. Clearly, many major businesses have worries and in the event of a ‘yes’ vote it is likely that at least some of them would vote with their feet and cross the border.

What about the banks?

At the moment, Scottish banks and other financial institutions operate under UK law. In the event of a ‘yes’ there would need to be a new regulatory framework and new measures for consumer protection. Against that the pro-independence lobby point to many European countries roughly the size of Scotland that operate banking and financial sectors quite successfully – albeit very often under the EU umbrella. What’s clear is that Scotland cannot vote for independence on September 18th and be admitted as a member of the EU on September 19th.

How would financial services be affected?

Inevitably the regulatory regime would change in an independent Scotland. It may well be the case that some products and services currently available may cease to be available. At the moment, clients’ policies and investments are governed by UK law – whether a policy set up under UK law could still operate under that law if Scotland were independent is a question which must have the barristers rubbing their hands. So yes, financial services and its regulation could very well change, as could the taxation treatment of clients’ policies and investments.

We hope the above is helpful – sadly, for many of the issues there are far too many ‘don’t knows’ for comfort and as September 18th draws closer, it is likely to be the rhetoric – not the clarity – which is increased.

HK Wealth Budget Summary 2014

"A Budget for makers, doers and savers". George Osborne delivered the 2014 Budget to Parliament yesterday and with it the customary outlook on the UK’s financial and economic situation. There were a number of surprises in the Budget for savers and pensioners with significant financial planning considerations.  The Budget has wide-ranging implications for both individuals and businesses and so, to help put the Chancellor's announcement in to context, I've produced an easy to read guide, providing context to many of The Budget's details and examining their likely impact.

I think it's important to keep you updated on a variety of financial matters, including The Budget and I hope you find the guide helpful. If you have any questions about The Budget or any other topic please do not hesitate to get in touch: I'll be happy to assist you in any way I can.

VCTs and EIS compared

Both are high risk investments – but both have the potential of high reward…

Let’s start with some facts. A Venture Capital Trust (VCT) is an investment vehicle quoted on the stock market, like an investment trust. The VCT scheme is designed to encourage investment in smaller, normally higher risk companies, often including start-up companies. The VCT therefore has to hold at least 70 per cent of its portfolio in these qualifying companies with a range of rules defining what is and isn’t a qualifying company. For example, no company it invests in can have gross assets in excess of £15m and none may comprise more than 15 per cent of the entire portfolio.

An Enterprise Investment Scheme (EIS) is an investment in a single unquoted, privately held company. With such an investment, there’s also an opportunity to participate in the running of the business – and to get paid for doing so.

Both investments come with substantial tax breaks. With a VCT, you can invest up to £200,000 per tax year in ordinary shares and qualify for 30 per cent income tax relief, provided you hold the shares for at least five years. There’s no CGT on disposal (but also no CGT relief on losses). Dividends are exempt from income tax.

With an EIS, you can invest up to £1,000,000 and receive 30 per cent income tax relief if you hold the investment for three years. Gains are CGT free, and you can defer CGT gains on other assets by investing them into an EIS. The charges on both VCTs and EIS are higher than on unit trusts and investment trusts.

So, which is better? For many of us, the answer would be “neither”. Both are high risk investments – due to the inherent fragility of start-up companies, in which both vehicles invest. According to the Times 100, one in three UK start-ups don’t last three years. The reasons are many: lack of experience, over-borrowing and under-capitalisation, poor business models, and so on. It’s possible to lose all your money invested in a VCT or an EIS.

However, this means that two-thirds of start-ups do survive: and some of these inevitably go on to become very successful.

So, while unsuitable for novice investors, more experienced and wealthier investors might want to consider these as part of their portfolio.

That being said, which is best? That will depend on your circumstances. However, the VCT spreads risk by investing in a number of companies, not just one like the EIS. Also, because VCTs are traded, you can sell them after five years (or earlier, if you’re prepared to forego the tax breaks). An EIS is highly illiquid, and usually the only way to realise your investment is through flotation.

As always, taking expert, independent financial advice is suggested before indulging in this form of investment. But if you’re happy to take on extra risk for the potential of greater gain, they might be worth considering.

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Sources: hmrc.gov.uk

10 New Year’s Resolutions for your Financial Planning

The economies on both sides of the Atlantic might be showing clear signs of an upturn as we start the New Year, but that doesn’t mean we can suddenly afford to ignore our personal financial planning. So in the best traditions of New Year here are ten financial planning resolutions that will hopefully help make 2014 a prosperous and secure year for you.

1. I will save some money on a regular basis. It might be your daughter getting married, it might be one or more of your children going to university – or it might be a more sombre reason. But at some stage in all our lives we are going to need savings to fall back on: so make a resolution to save on a regular basis in the New Year. Better to save first and spend what you have left than spend first and then save – because as we all know, there probably won’t be anything left!
2. I will admit I’m going to get old. We don’t just mean feeling old after one Xmas party too many – we mean you should make 2014 the year when you have a thorough review of your pension planning. Taking some action now could well save you a lot of heartache later on. The message from the Government (and any subsequent Government) will be simple: if you want a prosperous retirement it’ll be up to you to provide it.
3. I will check what I’m paying on my mortgage. Interest rates have been very low for some time now, but 2014 may well be the year when they start to creep up. If that happens mortgage rates will go up as well. So review your mortgage to make sure that it’s competitive and that you’re paying as little as possible.
4. I will review my life cover and protection policies. It’s always worth keeping these policies under review, both to make sure that you have adequate cover and to make sure that you are still paying a competitive rate for the cover you have in place. The cost of protection can and does fluctuate and as with your mortgage, it will cost you nothing to ask us to review the arrangements you have in place.
5. I won’t pay the taxman more than I need to. Couldn’t we all agree with this one? If you’re saving on a regular basis make sure you use your ISA allowances and look at the tax efficient ways in which a pension can be used. Far too many of us are inadvertently paying tax that we simply don’t need to.
6. I will use all my tax allowances. Even sophisticated investors often forget to make use of allowances such as the annual Capital Gains Tax allowance (don’t forget that a married couple can both use the individual CGT allowance). And despite the threshold going up, Inheritance Tax is another area where a small amount of planning can pay significant dividends. If you’d like further details on either of these two areas of tax planning don’t hesitate to contact us.
7. I won’t forget about my investments. How often do we see new clients with a portfolio of investments that hasn’t been looked at for years? If you do have investments, make sure you keep them under regular review.
8. I won’t obsess about my investments. The other side of the coin – the investor who is constantly tinkering with his investments, so that whatever gains he might have made are wiped out by dealing costs. Remember that investments are for the long term: they need to be regularly reviewed – as we do with all our clients’ portfolios – but as the old wealth warning reminds us, they can and do fluctuate in value.
9. I won’t get sentimental. We’re not talking about your personal relationships here, but about investments you might have held for a long time. One of the best things a regular review from your professional adviser does is highlight areas of your portfolio which are underperforming. And irrespective of how much money a particular holding might have made you ten years ago, if it is underperforming now it may well need to be changed.
10. I will keep in touch with my professional advisers on a regular basis. Everyone’s personal circumstances change, and their financial planning needs change accordingly. That’s why we’re so keen on regular reviews and regular meetings and, as all our clients know, we’re always available should you have any questions.

Autumn Statement 2013 - Need to Know:

Key points

“Britain’s economic plan is working, but the job is not done,” the chancellor George Osborne said in one of the most leaked statements in history.

“Responsible” was the key word from the chancellor’s 50 minute speech.

£100m of Libor fines will be made available to military charities and to extend support in the police, fire and ambulance services.

April 2014 will see the state pension rise by £2.95 per week, meaning pensioners will be £800 better off every year.

Based on the latest life expectancy figures, it was announced that the government plans to increase the state pension age earlier than originally planned. It will be increased from 68 in the mid-2030s to 69 by the late-2040s.

The fall in GDP from peak to trough between 2008 and 2009 was not 6.3 per cent as previously thought. It was 7.2 per cent instead.

From April 2015, a new transferable tax allowance will be made available for married couples. Available to all basic rate taxpayers, it enables people to transfer £1,000 of their personal allowance to their wife, husband, or civil partner.

big numbers

0.4 per cent - The percentage the OBR predicts the eurozone will shrink by in 2014.

7.2 per cent - The revised decline in GDP in 2008-09, increased from the original 6.3 per cent originally predicted.

43 - The number months the coalition has been in charge of government.

400,000 - The number total new jobs is expected to rise by December 2014.

1.5m - The amount of jobs for young people under 21 that National Insurance contributions will be removed from.

£300m - The amount the housing revenue account borrowing limit will be increased by.

£111bn - The amount the government will borrow this year, falling in 2014-15 to £96bn, falling to £79bn in 2015-16, £51bn the year after and £23bn the year after that.

Need to know:

The statement in brief

•           From next year, the government will introduce   a new cap on total welfare spending.   However, state pension will be excluded. The   chancellor said this is “better controlled over a   longer period”.

•           In line with the move on Aim shares last year,   exchange-traded fund stamp duty will be   abolished. This is a drive to encourage funds to   locate in the UK.

•           From April 2014, the UK will be one of the   first countries to introduce a tax relief for   investment in social enterprises and new social   impact bonds.

•           The two Help to Buy schemes have already   helped many new home owners. It was   announced Aldermore and Virgin are   expected to join the scheme in December   2013.

•           The business rate relief scheme for small   businesses, which was due to end in April   2014, will be extended for a further year.   Additionally, inflation increase for all business   premises will be capped at 2 per cent from   2014.

•           KPMG’s report last week confirmed for the   second year running, Britain has the most   competitive business tax system.

•           Fuel duty will be frozen instead of going up by   2p a litre.

OBR figures

Figures from the Office of Budget Responsibility (OBR) shows:

•           It has “reassessed the depth of the great   recession”.

•           It has revised its UK growth forecast for 2013   from 0.6 per cent to 1.4 per cent. It has also   increased for 2014 from 1.8 per cent to 2.4 per   cent. For the next four years, it sees growth at   2.2 per cent, 2.6 per cent, 2.7 per cent and 2.7   per cent.

•           The OBR still forecasts the eurozone will

  shrink by 0.4 per cent this year.