The black hole Budget

*Economy will shrink by 3.5%
*Government will borrow £606bn over the next four years
*New top rate of income tax at 50% from April 2010 on earnings above £150,000
*Petrol duty will rise by 2p from September and 1p above inflation for the next four years
*Alcohol and tobacco up by 2%

CHANCELLOR Alistair Darling will borrow a "staggering" sum of money after admitting the UK economy will suffer its worst year since 1945 in today's Budget Speech.

Mr Darling announced borrowing of £606bn over the next four years and repeated that spending the way out of a recession was the best way forward.

He forecasted that the economy will shrink by 3.5% during 2009 but expects it to grow by the end of the year.

The estimated decline of 3.5% is a significant revision from the prediction of 1% announced in the pre-Budget report in November.

And the £606bn figure follows borrowing of £90bn over the last financial year, more than the forecast of £78bn.

That brought the UK's total net debt to £743.6bn, more than half of the UK's GDP.

But he said he expects the economy will grow by 1.25% in 2010, rising to 3.5% in 2011 and will be aided by £15bn of "efficiency savings".

The figures contradict estimates by the International Monetary Fund that the economy will shrink by 4.1% this year and 0.4% in 2010.

And Conservative leader David Cameron referred to "Labour's decade of debt".

He mocked the government's attempts to eradicate child poverty and he criticised the "staggering" government borrowing proposals.

Mr Cameron said: "With debt like that, our children are going to be in poverty for decades... They will never forgive the people who have done this."

Mr Cameron added that borrowing is set to be worse than the 1970s when Labour Chancellor Denis Healey had to go to the IMF.

Lib Dem leader Nick Clegg referred to the Budget as a "mish-mash of recycled announcements". He also called for an end to the "pointless" VAT cut.

In the most striking announcement of the day, Mr Darling introduced a new top rate of income tax of 50% for those earning more than £150,000 from next April.

The increase from the 45% top rate announced in the pre-Budget report in November breaks a promise in the last Labour manifesto not to raise income tax.

And more bad news followed for motorists, drinkers and smokers. Petrol duty will increase by 2p in September and then by 1p above inflation for the next four years.

Alcohol and tobacco duties will both rise by 2% with immediate effect with the cost of a pint increasing by 1p and a bottle of win by 4p and a bottle of spirits by 13p.


Tax and NI Tables
As a former minion of HMRC, I have drawn up a tax and NI table below showing the amount of income tax and National Insurance due per month based upon annual salaries between £6000 and £100000.
The new personal allowance for this tax year (6 April 2009-5 April 2010) is 6475 with tax @20pc above this. Earnings above £43875 are taxed @40pc.
National Insurance is charged @11pc on earnings above £5720pa, then @1pc on earnings above £43875.
This works out as follows:
Gross salary £ 6k. Tax paid per annum £NIL. NatIns paid per annum £30 = £2.50 tax and NI per month
Gross salary £ 8k. Tax paid per annum £305. NatIns paid per annum £250= £46 per month
Gross salary £10k. Tax paid per annum £705. NatIns paid per annum £470= £97 per month
Gross salary £12k. Tax paid per annum £1105. NatIns paid per annum £690= £150 per month
Gross salary £14k. Tax paid per annum £1505. NatIns paid per annum £910= £201 per month
Gross salary £16k. Tax paid per annum £1905. NatIns paid per annum £1130= £252 per month
Gross salary £18k. Tax paid per annum £2305. NatIns paid per annum £1350= £305 per month
Gross salary £20k. Tax paid per annum £2705. NatIns paid per annum £1570= £357 per month
Gross salary £25k. Tax paid per annum £3705. NatIns paid per annum £2120= £485 per month
Gross salary £30k. Tax paid per annum £4705. NatIns paid per annum £2670= £614 per month
Gross salary £35k. Tax paid per annum £5705. NatIns paid per annum £3220= £743 per month
Gross salary £40k. Tax paid per annum £6705. NatIns paid per annum £3770= £873 per month
Gross salary £45k. Tax paid per annum £7930. NatIns paid per annum £4208= £1011 per month
Gross salary £50k. Tax paid per annum £9930. NatIns paid per annum £4258= £1182 per month
Gross salary £100k. Tax paid per annum £29930. NatIns paid per annum £12250= £3515 per month