UK takes steps to fight recession

Finance minister to inject $30bn into economy and cut sales tax by 2.5 per cent.

    The cut in sales tax follows already steep cuts in prices from retailers [GALLO/GETTY]

    Recessionary slide

    Britain is already sliding into recession with house prices slumping, unemployment rising and manufacturing output shrinking.

    Darling hopes that the cut in sales tax to 15 per cent, the lowest level allowed by the European Union, will boost consumers' spending power before Christmas.

    The cut is to be reversed after one year.

    In March, Darling forecast economic growth of about two per cent this year and around 2.75 per cent next year.

    In Monday's address, he dramatically cut growth forecasts for 2009 to between -0.75 per cent and -1.25 per cent, the largest ever downward revision by a UK finance minister.

    Although the handling of the financial crisis by Gordon Brown, the British prime minister, has lifted his declining popularity, a poll published on Sunday still showed his Labour party trailing the opposition Conservatives by 11 points, a wider margin than some other recent surveys.

    His chances of winning the next election, due by mid-2010, may depend on the recession being relatively short and shallow, but that is looking increasingly unlikely.

    Germany, the Netherlands and Spain have already announced stimulus plans.

    A European Union package, worth up to $163bn, will be unveiled on Wednesday.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Lost childhoods: Nigeria's fear of 'witchcraft' ruins young lives

    Lost childhoods: Nigeria's fear of 'witchcraft' ruins young lives

    Many Pentecostal churches in the Niger Delta offer to deliver people from witchcraft and possession - albeit for a fee.

    The priceless racism of the Duke of Edinburgh

    The priceless racism of the Duke of Edinburgh

    Prince Philip has done the world an extraordinary service by exposing the racist hypocrisy of "Western civilisation".

    Why a hipster, vegan, green tech economy is not sustainable

    Why a hipster, vegan, green tech economy is not sustainable

    Improving eco-efficiency within a capitalist growth-oriented system will not save the environment.