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Wednesday, 27 November, 2002, 16:42 GMT
What the pre-Budget report means for you
More government borrowing, lower economic growth - that is the message Chancellor Gordon Brown delivered in his pre-Budget report. BBC News Online explains the impact of Mr Brown's statement on your daily life.

Give it to me straight: Will I be worse or better off?

Well, you will be worse off, but not because of the chancellor's speech.

This year there have been no headline-grabbing announcements on tax cuts or rises.

And in theory that's how it should be. The pre-Budget statement is supposed to give guidance on future tax policy and the state of the economy.

But come April next year - assuming you have a reasonably well-paid job - you will indeed be worse off, because that is when your National Insurance contributions will go up by one percentage point.

This change, though, was announced in the Budget in April this year.

And something that may hit you in about three years' time was slipped out on Tuesday: a painful increase of council taxes through the back door.

For the first time since the introduction of council tax nine years ago, records of property values will be updated. This will push many property owners into a higher council tax band - unless we experience a house price crash by 2007.

But there was some good news on pensions, with the chancellor ruling out abolishing tax-free lump sums and tax relief on pension contributions.

Payments into pension funds are tax-free - which means the state effectively contributes 22p for every 78p invested by a standard rate taxpayer, and 40p for every 60p invested by a higher rate taxpayer.

Under current rules, a tax-free cash lump sum can be withdrawn from most pension funds.

The Chancellor says he has to borrow a lot more. Should I care?

Not straight away - an extra 9bn of government borrowing will not destroy the lending market.

But it's a clear sign that the days of budget surpluses are over for now.

If Mr Brown got his numbers wrong and tax revenues stay flat, he will have to tap the money markets yet again.

This could drive up interest rates, make it more difficult for companies to raise the money to invest, and ultimately could make your mortgage more expensive.

In the City of London, economists speak of a "nasty surprise". Some cynics, though, say Mr Brown may be scaremongering, so that he can present a more glowing picture in next year's Budget.

Lots of scary stuff about the state of the economy, though...

It's been quite a blow for Mr Brown. For the first time he had to cut back his forecast for economic growth - to an annual growth rate of just 1.6%.

This is not pretty at all, but - as the chancellor emphasised at length before finally revealing the bad news - it's much better than all the world's other major economies.

Even the US economy is still sputtering, with another sharp slowdown predicted for the last three months of this year.

It doesn't look pretty in the UK, but the grass is not greener on the other side.

The problem: to balance his books Mr Brown predicts strong growth in future years. If that does not materialise, it will be time for another embarrassing Budget statement.

But what about my future, I'm really worried about my pension!

Ah yes, pensions. Or as Tony Blair put it, the biggest problem the government is facing in the longer term.

In Wednesday's report, Mr Brown has already promised generous tax credits to pensioners with modest savings, so as not to "penalise" them.

For a clearer answer you will have to wait until 17 December, when the government will publish its Green Paper on pensions reform.

The paper should form the basis for an overhaul of the whole pensions sector - and help sort out the mess left by the closure of many company final salary schemes and the decline of life assurers such as Equitable Life.

At the same time it will lay out the government's plans to encourage Britons to save more money to help them in later life.

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