The 23 per cent applying to large companies will be cut to 20 per cent by April 2015. The rate had stood at 28 per cent when the Conservative-Liberal coalition took power in 2010.

 

The measure was announced as part of Chancellor George Osborne’s 2013 Budget, announced in the House of Commons today.

 

The budget measures also include new tax incentives to encourage the extraction of shale gas – typically withdrawn through the controversial method known as ‘fracking’ – as an incentive to encourage its exploitation.

 

The Budget – the first since Britain lost its AAA rating – saw Osborne halve his projections for economic growth for 2013, halving the expected increase in GDP from 1.2 per cent to 0.6 per cent. Projections for 2014 were trimmed from 2.0 per cent to 1.8 per cent.

 

Budget for an ‘aspiration nation’

Claiming his measures were geared to an “aspiration nation”, much of Osborne’s speech focussed on new tactics to kickstart Britain’s property market.

 

“What symbolises that more than the desire to own your own home?,” Osborne asked, saying the current difficulties experienced by young buyers in getting mortgages, because of an inability to offer a full deposit, was “not just a blow to the most human of aspirations” but also to construction and social mobility.

 

The government will offer a 20 per cent loan to people buying newly-built homes worth under £600,000, who can offer their own 5 per cent deposit, with no interest accrued for five years and the balance of the loan repaid only when the house is resold.

 

A separate government guarantee will be offered for all homeowners who cannot accrue a large deposit, which Osborne said would free up banks to offer mortgages worth an additional £130 billion from 2014 to 2016.

 

Elsewhere, deeply unpopular levies on fuel and beer – imposed by the previous Labour government, to be increased on an incremental basis – are being abandoned, with a 1p cut on the levy on a pint of beer.

 

Osborne said the government was looking at other measures to stop the sale of cheap alcohol, but insisted that responsible drinkers should not be expected to pay more because of the behaviour of others.

EU economics commissioner Olli Rehn: The Commission has said it did not want bank balances under €100,000 to be subject to a controversial deposit levy. , Yves Logghe/AP

 

THE EUROPEAN COMMISSION has appeared to rule out the prospect of revising the terms of the bailout it has offered to Cyprus – saying it is up to the government to find alternative measures that will not be vetoed by its national parliament.

 

Brussels has said the rejection of the proposed €10 billion bailout in the parliament yesterday – when not a single MP voted in favour of a deal that included an extraoirdinary levy on bank deposits – meant the ball was now in the court of the Cypriot government.

 

“Whilst this programme did not in all its elements correspond to the Commission’s proposals and preferences, Claire Hsu the Commission felt the duty to support it since the alternatives put forward were both more risky and less supportive to Cyprus’s economy,” the Commission said in a statement.

 

This programme was not accepted by the Cypriot parliament.

It is now for the Cypriot authorities to present an alternative scenario respecting the debt sustainability criteria and corresponding financing parameters.

 

The statement came after Cyprus’s interior minister said the Troika had already rejected a ‘Plan B’ compromise it had tabled.

 

The Commission said it would have preferred if the proposed levy on bank taxes – which has prompted banks to remain closed for a third successive day, fearing a run when depositors get a chance to withdraw their savings – had not targeted balances under €100,000 at all.

 

The levy, which had aimed to raise €5.8 billion, would have seen 6.75 per cent taken off the balances of all bank accounts with under €100,000 on deposit, and 9.9 per cent on other accounts. The money would have been converted into bank shares and given to the account holders.

 

“The Commission made it clear in the Eurogroup before the vote in the Cypriot parliament, that an alternative solution respecting the financing parameters would be acceptable, executive gift preferably without a levy on deposits below €100,000,” it said.

 

“The Cypriot authorities did not accept such an alternative scenario.”

 

The proposals ultimately put to MPs yesterday would have exempted accounts with under €20,000 from the balance, but did not increase the levies at the higher end – meaning the total made under the deal would have been about €300 million short.

 

Cyprus is a popular offshore banking venue with cash-rich Russian investors, children’s bedroom furniture leading Russia to attack the proposal. Its banks have faced capital shortfalls since incurring heavy losses on Greek government bonds, which defaulted in an EU-backed move last year.

 

Today the Cypriot finance minister has travelled to Moscow to meet his Russian counterpart and discuss the possibility of having the €10 billion in European loans replaced with Russian investment.

 

Russia has already lent €2.5 billion to Cyprus, which was due to be repaid in 2016. Cyprus has been seeking an extension on its repayment dates in parallel with its separate talks on an European bailout.