Unit 5 the UK Economy.pptVIP

2. Impact on the UK * 3. UK’s rescue plan On the October 8, 2008 the British Government announced a bank rescue package of around ￡500 billion. First, ￡200 billion will be made available to the banks in the Bank of Englands Special Liquidity scheme. Second, the Government will increase the banks market capitalization. Third, the Government will temporarily underwrite any eligible lending between British banks up to around ￡250 billion. * * * On 24th, November 2008, Pre-Budget report by Chancellor Alistair Darling biggest shake-up of Labours economic policy since it came to power in 1997 The main rate of VAT will be reduced from 17.5pc to 15pc temporarily from December 1 until December 31 2009. This will create the equivalent of ￡275 a year for the average household to spend There will be a new rate of income tax of 45pc for those who earn ￡150,000 a year or more. It will be effective from 2011. * Queen’s Speech 2008 official state opening of Parliament: The Queen has outlined the Government’s priorities for the coming Parliamentary year in the Queen’s Speech. The stability of the British economy in?a period of economic downturn?was highlighted as a key area for Government action. Legislation will be introduced?to strengthen the financial sector and protect businesses and families through, for example, a Banking Bill and a?Welfare Reform Bill. * The Queen said: “My Government is committed to helping families and businesses through difficult times. “The strength of the financial sector is vital to the future vibrancy of the economy. Therefore, legislation will continue to be taken forward to ensure fairer and more secure protection for bank depositors and to improve the resilience of the financial sector.” * Bank cuts UK rates to 57-year low In December, 2008 The Bank of England cut interest rates by one percentage point, from 3% to 2% - the lowest level since 1951. * Brown unveils mortgage help plan Many people hit by the downturn will be able to defer p