2016 Budget: Overview and Reactions
This Lords Library briefing provides a summary of 2016 Budget announcements and the immediate reaction.
This Lords Library briefing on the Chancellor of the Exchequer, George Osborne’s, 2016 Budget provides an overview of some of the key measures. The briefing then outlines the immediate reaction to the statement by MPs on the day of the Budget Statement and by a selection of organisations and commentators.
Announcements
The Chancellor announced a range of measures in the 2016 Budget, including:
- A new drive to reduce Government spending by a further £3.5 billion in the year 2019–20.
- An increase in the income tax personal allowance to £11,500 in April 2017.
- An increase in the higher rate threshold for income tax to £45,000 in April 2017.
- A raising of the ISA limit and introduction of a new ‘Lifetime ISA’.
- A reduction in the main rate of corporation tax to 17 percent in 2020.
- Changes to business rates, capital gains tax and national insurance contributions.
- Reforms to education, including converting all schools to academies by 2020.
- The introduction of a new levy on the soft drinks industry from April 2018.
Economic Forecasts and Fiscal Rules
The Office for Budget Responsibility (OBR) reported that its GDP growth forecast for 2016 would be revised down from 2.4 percent to 2 percent, citing a pessimistic international economic outlook and low productivity growth. The OBR’s forecast for UK output per hour was revised down. While the Chancellor would miss his target to achieve a fall in net debt as a proportion of GDP in the current year, the OBR forecast that he was expected to reach another of his targets, the achievement of a budget surplus by 2019–20.
Other information
The House of Commons Library have published: