Last week saw the Chancellor George Osborne release the UK’s Summer Budget, which according to most reports, is the most conservative budget we’ve seen for almost two decades. This does of course mean that it has been met with mixed reaction, but as the Conservative Party are traditionally seen as the party of business and the economy, many will wonder if this latest budget will help the UK carry on down the path of recovery following the recent economic crisis. Let’s take a look at how some of the Chancellors policies are likely to affect the UK economy.

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The Forecast

First, the headline figures from the Office for Budget Responsibility – this is a non-departmental public body that is intended to provide impartial forecasts for the economy. They’ve now revised their forecasts for 2017 to 2020, believing that the UK economy will grow by an additional 0.1 percent over the previous 2.3 percent forecast. This is good news indeed, and shows that the UK economy should continue to strengthen. Those with a keen eye on the forex markets may well see that this coincides with the faltering of the euro, so we could see a GBP/EUR record at some point in the not too distant future. Subscribe to the updates from  forex brokers such as FxPro to be kept up to date on these market movements.

Policies for the Economy

Corporation tax is likely to have the biggest impact on the economy as a whole if Conservative plans are to be believed. The idea is that lower corporation tax will encourage more business in the country, and therefore boost its economy. New plans will see the figure cut down to 19 percent in two years’ time, and then down to 18 percent in 2020. This is a 10 percent decrease since George Osborne became the chancellor back in 2010, but it remains to be seen how much impact it’s having.

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Cutting the deficit has been a big target for many economists too, and Osborne will continue down this path through massive cuts to welfare spending, though this is perhaps the most hotly debated issue.

In truth, only time will tell how the summer budget will really effect the economy. On the one hand you have the Conservative government and its supporters championing business and robust forecasts, and on the other, there are those that believe continued austerity measures will significantly harm the fortunes of the average earner in the country, which would likely have a knock-on effect on the economy as a whole. The calculator at the bottom of this page will give you a good idea as to how the budget might affect people in differing financial situations.