Chancellor Alistair Darling prepares ‘Budget for jobs’

When he delivers the Budget today at 12.30pm, the chancellor is likely to announce a raft of policies aimed at turning round the hard-pressed UK economy. Chief among his priorities will be worsening unemployment in industries hit hard by the deterioration in the economy.

Forecasts for Government borrowing needs - as predicted by the IMF yesterday in a new report - vary from £150bn to £200bn with the recession already considerably worse than the estimates in November's Pre-Budget Report.

However experts have issued warnings that with Britain's fiscal position worsening Darling has little room for manoeuvre. Mervyn King has warned against the Government taking on too much spending with the result being that Darling is treading a fine line.

Jonathan Loynes of Capital Economics said that the Chancellor faces "the unenviable task in his second Budget of trying to offer the economy some much-needed support, whilst at the same time reassuring markets that the public finances will eventually return to health."

In a 'Budget for jobs' Darling will announce the creation of 250,000 jobs together with employers and authorities, with a £2.5bn package to guarantee training for every young person out of work for more than a year. And he will put forward plans to help the poorest, with emergency loans and grants.

Also likely is a 'scrappage' scheme to aid the struggling car industry, which will give consumers a trade-in sum of up to £2,000 if they excyhange their old car for a new model. The scheme has been successfully rolled out in Germany and other European countries.

WHAT THEY ARE SAYING
Alice Miles, the Times: "The 'Budget for jobs' has as much to do with politics as with practicality. Labour focus groups have shown that voters remember painfully the last recession when the Tories 'did nothing' to help the unemployed or those who lost their homes. Enter Mr Brown and Mr Darling with their 'Budget for jobs' and support for homeowners struggling with mortgages. 'It's really important that we can go out and say we are going to do something,' as one adviser put it yesterday."

Larry Elliott, the Guardian: "It is unlikely the pubs on Wednesday night will be full of people praising Darling for his £2bn (over two years) to combat unemployment rising even faster than it was in the early 1980s. Nor will they be considering whether Darling has got the balance right between short-term help for the economy and medium-term deficit control. Instead, the budget will throw up rather more basic questions. How did we get in this deep a hole? Is the country going bust? And why should we pay more tax just so bankers can go back to their bad old ways and Jacqui Smith's old man can watch mucky films?"