HIGHLIGHTS-UK's Osborne delivers half-yearly budget update

LONDON Wed Dec 5, 2012 8:23am EST

LONDON Dec 5 (Reuters) - British finance minister George Osborne presented his half-yearly budget statement to parliament on Wednesday.

Following are the highlights from his speech:

BRITISH ECONOMY IS HEALING

"It's taking time, but the British economy is healing. After the biggest financial crash of our lifetimes, people know that we face deep seated problems at home and abroad.

"The deficit has fallen by a quarter in just two years. And today's figures show it is forecast to continue to fall."

DEFICIT TARGETS

"We reaffirm our commitment to reducing the deficit, setting out the details of our spending plans for 2015-16 and rolling forward an outline framework into 2017-18."

OBR FORECASTS

"If, for instance, lower growth was the result of the Government's fiscal policy, they (OBR)would say so. But they do not. They say the economy has "performed less strongly" than they had expected.

"As a result the OBR forecast the economy will grow by 1.2 percent next year. Then 2.0 percent in 2014. 2.3 percent in 2015. 2.7 percent in 2016 and 2.8 percent in 2017. So the economy is recovering. It's recovering more quickly than many of our neighbours."

JOBS MARKET

"Instead of peaking at 8.7 percent, the OBR now expect unemployment to peak at 8.3 percent. More jobs means that the impact of the weaker than forecast GDP on the public finances has been less than some might have expected."

DEFICIT

"When the transfer is excluded, as we show in the document, the deficit also falls from 7.9 percent last year to 7.7 percent this year, then 6.9 percent next year and falls in every single year after."

FISCAL MANDATE

"This is the commitment that we will balance the cyclically-adjusted current budget over the coming five years. I can tell the House that the OBR have assessed that we are, in their words, 'on course' to meet our fiscal mandate.

"But the OBR assess in their central forecast that we do not meet the supplementary objective that aims to have debt falling by 2015-16. The point at which debt starts to fall has been delayed by one year, to 2016-17.

"In short, the tougher economic conditions mean that while our deficit is forecast to go on falling, instead of taking three years to get our debt falling, it's going to take four."

SPENDING PLANS

"This lower deficit is delivered by our public spending plans and we are going to stick with those plans. Overall, we are not going faster or slower with those plans; the measures I will announce in this Autumn Statement are fiscally neutral across this Parliament.

"The detail of departmental spending plans for 2015-16 will be set at a spending review, which will be announced during the first half of next year. We extend the consolidation for one further year, into 2017-18."

PENSION RELIEF

"We have in this Parliament already reduced the amount of tax relief we give to the very largest pension pots. From 2014-15, I will further reduce the lifetime allowance from 1.5 million pounds to 1.25 million pounds and reduce the annual allowance from 50,000 pounds to 40,000 pounds.

BENEFITS

"Most working age benefits including Job Seekers Allowance, Employment and Support Allowance and Income Support - will be uprated by 1 percent for the next three years."

TAX THRESHOLDS

"The higher rate threshold will be increased by 1 percent in the tax years 2014-15 and 2015-16.

"From next April, the personal allowance will rise by a further 235 pounds - that means a total increase next year of 1,335 pounds - the highest cash increase ever. I propose to extend the benefits of this further increase to higher rate taxpayers."

SHALE GAS

"We are consulting on new tax incentives for shale gas and announcing the creation of a single Office for Unconventional Gas so that regulation is safe but simple."

EXPORTS

"We are launching a new 1.5 billion-pound export finance facility to support the purchase of British exports."

CORPORATION TAX

"I am today cutting the main corporation tax rate again by a further 1 percent. From April 2014, the corporation tax rate in Britain will stand at 21 percent."

BANK LEVY

"We will not pass the benefit of this reduced rate onto banks, and to ensure that we meet our revenue commitments, the Bank Levy rate will be increased to 0.130 percent next year."

FUEL DUTY

"There is a 3 pence per litre rise planned for this January. Some have suggested we delay it until April. I disagree. I suggest we cancel it altogether. There will be no 3 pence fuel tax rise this January."