UK not looking pretty – ING

By FXStreet James Knightley, analyst at ING Bank explained that Chancellor Osborne’s 2016 Budget statement has acknowledged the weaker economic environment with growth forecasts being cut for the next five years.

Key Quotes:

“Consequently, the economy is now projected (by the Office for Budget Responsibility) to be 1.4% smaller in real terms by 2020 than expected just a few months ago. In order to meet his goal of balancing the books he has announced that government spending will be cut by £3.5bn over the life of this parliament with government spending as a proportion of GDP falling to 36.9% by 2020. How these cuts will be made has not been outlined other than described rather vaguely as “savings”. With department budget already having been cut aggressively it will be interesting to see where new efficiency savings can be made. Nonetheless, borrowing and debt forecass have had to be revised higher.

There are some partial offsetting positives that will help to provide support to the economy. There will be a £500 increase in the tax free allowance (the amount of income earned before income tax is changed) and a rise in the threshold that the 40% tax rate kicks in. Capital gains tax is being reduced, …read more

Source:: FX Street