Alistair Darling's mini-Budget: can he afford it?

Alistair Darling's mini-Budget: can he afford it?
Document type
Chote, Robert; Emmerson, Carl
Institute for Fiscal Studies
Date of publication
1 May 2008
The Institute for Fiscal Studies Briefing Notes
Trends: economic, social and technology trends affecting business
Business and management
Material type

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This briefing note briefly assesses the government's claims that the tax cuts introduced in May 2008 are affordable, within the constraints laid down by its fiscal rules, and provide a useful stimulus to the economy at a time when economic growth is slowing. The government's decision on 13 May 2008 to increase the personal income tax allowance by £600 and to reduce the effective upper-rate threshold by the same amount for 2008–09 is estimated to cost £2.7 billion (just under 0.2% of national income). The Chancellor, Alistair Darling, told the House of Commons: 'I am able to finance this proposal through borrowing this year ensuring that we do not take money out of the economy at this time'.

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