The UK’s predicted economic growth has been upgraded by the Office for Budget Responsibility, which has upped its forecast for 2014 to 2.4 per cent growth, compared with the 1.8 per cent it had predicted in March this year.
In his Autumn Statement, chancellor George Osborne said the government’s independent forecaster has calculated that Britain’s economy will grow by 1.4 per cent this year and 2.4 per cent next year.
He noted that conditions have improved significantly since March, when the forecast was for 0.6 per cent growth in 2013 and 1.8 per cent in 2014 – raising the possibility of the budget surplus being brought forward due to taxes flowing in faster and public finances being boosted.
The estimates for 2014 also place the UK ahead of other European economies, with the International Monetary Fund (IMF) forecasting growth of just one per cent for the eurozone next year, and 1.4 per cent for Germany, its largest economy.
Conversely, the IMF’s forecast for UK growth in 2014 is 1.9 per cent, which suggests the country is likely to prove an attractive destination for business deals.
One caveat for overseas investors, namely those operating in the property market, is that they will have to pay Capital Gains Tax (CGT) for future gains on second homes bought in the UK from April 2015.
Currently, overseas property investors do not pay the tax in this way, unlike UK residents, and Mr Osborne explained that the new announcement is designed to increase fairness for domestic buyers.
Furthermore, the chancellor has altered the method of calculation for CGT, with only the last 18 months disregarded before a second home is sold, compared to the former method, which saw the last three years discounted.
Mr Osborne has also promised to provide £1 billion of loans and unblock some housing developments to further boost the property sector.
He concluded: “If we want more people to own homes, we have to build more homes.”