Chancellor Alistair Darling has delivered his Pre-Budget Report: Securing the recovery: growth and opportunity. His main theme was the halving of the level of public borrowing to 5.5% of GDP in 2013/14 (although it is currently 12.6%), while continuing to invest in frontline public services.

For a summary of the Pre-Budget Report as it affects investments and funding for pensions please visit our website where you will be able to access our pdf Guide: Pre Budget Report 2009.

The UK economy is forecast to shrink 4.75% in 2009, which is worse than the 3.5% forecast in the 2009 Budget earlier this year.

The government expects the recession to have ended by the time we celebrate the New Year. Of course this just means that there will be positive GDP growth not that ‘normality’ will return.

The Chancellor predicts CPI (Consumer Prices Index) will rise to 3% during next year, before falling again. He says the Bank of England expects inflation to be at 1.5% by the end of the year, 0.5% below target.

Whichever Government is in power after May 2010 may feel it is in its interest to allow inflation to rise by more than 3%. For further comments on this and particularly its implications for fixed interest investments see our previous blog.

Please note that this information does not constitute personal advice and should not be treated as a substitute for specific advice based on your circumstances. The information given in this blogg and in our Guide relating to income tax and pensions legislation etc is based on our understanding of the intentions of the Chancellor as outlined in the Pre-Budget Report 2009. Whilst we believe our interpretation to be correct in these areas, we cannot be responsible for the effects of any future legislation or any change in interpretation or treatment. In particular these proposals could be altered by the time the Finance Act is passed.

If you would like to discuss the implications of the Chancellor’s proposals on your financial planning please ask your usual Arch adviser, telephone 01483 204600 or email enquiries@arch-fp.co.uk.