But economy will contract by 3.5% and public borrowing will reach 拢175bn in 2009
The chancellor of the exchequer Alastair Darling has pledged 拢500m to restart building projects that have frozen to a halt.
Darling surprised pundits with a relatively optimistic Budget, predicting that the economy will begin to grow again in 2010.
The chancellor said that while the economy will contract by 3.5% in 2009, it will begin to grow again in 2010, at a rate of 1.2%, before predicting that growth would rise to 3.5% in 2011.
As expected, public borrowing will reach record heights, peaking at 拢175bn this year, or 12% of GDP.
The main news for the construction industry was the announcement of a 拢500m fund to restart stalled housing projects. There is also a 拢100m package for local authorities to spend on energy-efficient housing developments. The chancellor also announced 拢405m for extra support to develop energy efficiency for buildings.
The chancellor said: 鈥淭his will give construction firms more certainty and help them meet housing demand more effectively.鈥�
Perhaps more importantly, the chancellor pledged that capital spending would continue at the same 鈥渉istorically high鈥� level as it is currently until 2012, and would be around 1.25% of GDP by 2013/4.
Also of help to small businesses such as construction firms will be a 鈥榯op-up鈥� trade credit insurance scheme under which the government will match private sector trade credit insurance provision for a temporary period, if insurers reduce cover of a particular business.
The chancellor will raise money by selling off 拢16bn of government assets and by raising taxes. Those who earn more than 拢150,000 a year will be taxed at 50% of their income from April next year.
As usual, drinkers, smokers and drivers will be expected to pay more in taxes. Tax on tobacco and alcohol will rise by 2% from tonight, while petrol duty will increase by 2p per litre in September and then by 1p a litre over inflation each April for the next four years.
Other measures announced included a scrappage scheme whereby drivers will be able to trade 10-year-old cars in exchange for a 拢2,000 discount on a new car.
In response to Darling budget, David Cameron, the leader of the Conservatives, said Labour had made an 鈥渦tter mess鈥� of the economy.
He said: 鈥淕ordon Brown has ensured that he has a chapter in the history books, but it is a chapter written in red ink: Labour鈥檚 decade of debt.鈥�
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