Pre-Budget Report - Wednesday, 6th December 2006

Gordon Brown's first farewell performance?

"It is time to do more..."

Gordon Brown, 6th December 2006

Pre-Budget Report - Speech
Gordon Brown's "latest" Pre-Budget Report
The Chancellor's legacy

Pre-Budget Report - measures that affect you

• ISA plans confirmed
• Brown sits on ASP
• Pension Term Assurance for the chop?
• Increases to Tax Credits and Benefits
• Income tax and National Insurance
• Fuel duties rise
• Green tax to hit air travellers
• Overseas ETFs exempt from tax
• Stamp duty exemption for zero carbon housing
• Real Estate Investment Trusts simplified
• Micro-generators get tax break
• Closing the tax door on Managed Service Companies

Gordon Brown's "latest" Pre-Budget Report

The Chancellor teased his audience by describing his speech as his "latest" Pre-Budget Report rather than, as many believe, his last. It was also his shortest - by a substantial margin. At 37 minutes in duration, Gordon Brown proved himself the bookies' friend. Spread betting firm CantorIndex had been quoting a spread of 42-43. Their coffers have been suitably lined as a result.

So, a short speech - almost a job application you might say - but was it sweet? Gordon Brown was able to claim that the economy will grow faster than expected this year, which is another way of saying he got his sums wrong earlier in the year. Brown said the economy would grow by 2.75 %in 2006, up from an earlier forecast of 2- 2.5%. He left his growth forecast for next year at 2.75- 3.25%. The CPI inflation rate is forecast to slow down to its target level of 2% by mid-2007 and, said Brown, would remain at that level in 2008.

He praised his own performance by noting that this would be Britain's 10th consecutive year of economic growth and claimed that he was on course to meet his two fiscal rules - the 'golden' rule and the sustainable investment rule both in this economic cycle and the next.

The Chancellor made regular disparaging comparisons through his speech to spending levels in 1997. Having been in office for almost 10 years it seems a little harsh to keep blaming the last Tory administration for everything that was wrong.

Gordon Brown made much of an increased spending commitment to education. Perhaps it was also a little harsh, therefore, of his opposite number, Shadow Chancellor George Osborne, to point out that this was actually the third occasion on which said proposed spending had been announced.

A raft of 'green'measures, including doubled air passenger tax next year and a midnight rise in petrol duty underlined the Chancellor's new green credentials. However, in his response, George Osborne suggested that Gordon Brown had been 'green' since a meal in a certain restaurant in Islington in 1994. He then pondered the significance of the fact that Granita has since changed its name to Desperados!

Francesca Lagerberg, tax partner at Grant Thornton commented, "The Chancellor's strategy in this year's Pre-Budget has clearly been to 'upset' the smallest amount of people with a conservative set of announcements which may well set the scene for a final Budget report in March when he'll be looking to boost his premiership aspirations - possibly with some tax cuts."

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