Download Our Summer 2015 Budget Bulletin

Two months and a day after the general election, George Osborne presented his seventh Budget – and second of 2015 – against a political background which few had expected in early May. This was the first purely Conservative Budget since Ken Clarke’s finale, back in November 1996.

Click here to download our Summer 2015 Budget Summary

The economic backdrop for this Budget was little changed from that of March. Although at a recently revised 0.4% the UK’s first quarter growth was lower than expected, the Office for Budget Responsibility (OBR) has marginally reduced its forecast for the year to 2.4%.

However, it has cut its projections for government borrowing in 2015/16 by nearly £6bn to reflect the marginally lower than predicted outturn for the last tax year and the buoyancy of tax income in the first two months of 2015/16. For 2016/17 and beyond the OBR has also revised borrowing numbers in response to a welcome change in the government’s spending plans: the previous ‘rollercoaster profile’, which had drawn criticism from the OBR’s chairman, has been smoothed out considerably.

Inflation, running at 0.1% on the CPI measure and 1.0% on the now discredited RPI yardstick has continued to help the Chancellor: the OBR thinks the Treasury will have save about £0.3bn in 2018/19 on debt servicing costs because prices are rising so slowly. Even so, government borrowing is still forecast to be nearly £70bn for 2015/16, a long way from the Chancellor’s recently announced plans, repeated in the Budget, to legislate for a surplus in ‘normal times’.

Low inflation should continue to benefit the Exchequer in coming years according to the OBR: it does not now foresee the CPI returning to the Treasury’s 2% central target until 2020. There is one exception to the low inflation assistance: pension increases. The political battle for pensioners’ votes means that the government is committed to maintaining the ‘triple lock’, which implies next year’s basic state pension rising by 2.5%, or more if earnings growth is higher (which, for now, it is).

In this Bulletin we look at the impact of the main changes on different groups of taxpayers.

Click here to download our Summer 2015 Budget Summary