On 12 March, the UK Chancellor of the Exchequer, Alistair Darling, delivered the Government’s 2008 Budget Report, which acknowledged the susceptibility of the UK economy to the unfolding financial credit crisis. The Report noted that the world economy was facing a more challenging environment than was apparent in 2007, with continued disruption in global financial markets, which had caused the downgrading of the UK economy growth forecast for 2009 from 2.5 – 3% to 2.25 – 2.75%. However, the Report argued that the UK economy was more resilient to this challenge than other economies thanks to “the Government’s macroeconomic framework and a decade of reform promoting open and flexible labour, product and capital markets”.
The Budget Report also said that the Government was taking steps to modernise aspects of insurance taxation, in particular, by:
• removing the requirement for overseas insurers to appoint a jointly and severally liable tax representative in the UK for insurance premium tax; and
• following consultation, simplifying and clarifying aspects of the life insurance taxation system through a package of measures on funding rules.