Would you like the good news first?

We’ve enjoyed another week of warm weather – warm that is by UK standards. On Wednesday the temperature hit 21°C, almost 7°C above the average. The Met Office says we’re on track to experience the nation’s warmest April for at least a decade. The final few days of the month are predicted to be cooler, but the sunshine will continue. Hooray!

It seems the weather was only good news on Wednesday. The UK Government presented its annual budget the same day. The numbers were dire. The chancellor announced that the UK economy will shrink by 3.5% in 2009, before returning to positive territory in 2010 with growth of 1.25%. However, the International Monetary Fund (IMF) released its own estimates the following day, predicting that GDP would fall by 4.1% this year, and continue contracting by 0.4% next year. This is the economy's worst performance for more than 60 years.


The annual budget deficit will rise sharply to a staggering £175bn for the next two years. By 2013, government borrowing will hit 79% of GDP, twice the level of 2008. The budget won’t be balanced until 2018 at the earliest. To pay for all of this taxes are on the way up. A new 50% marginal tax rate for earnings over £150,000 comes into effect next April, while numerous tax free allowances for high income earners will end. Taxes on fuel, tobacco and alcohol will also rise, while public sector spending will fall £13 billion. Quite simply, the UK’s economy is a mess.

Most commentators expect the UK’s rate of growth to fall behind most developed nations for the next four years. The Institute for Fiscal Studies (IFS) says government must close a £90bn hole to bring the budget into balance. This represents additional taxes of £2,840 for every family annually in 2017, or the equivalent in public spending cuts.

The numbers are so depressing it’s increasingly unlikely Garry and I will bother extending our work permits beyond 2010. We’re probably better off in Australia. At least we’re both fully employed, unlike 2.1 million others in the UK. Garry’s contract was renewed for another three months last week. With a little luck, it will continue to roll over at three-month intervals for the foreseeable future. Happy ANZAC Day!