Jam tomorrow budget
I’ve now had two days to reflect on George Osborne’s fourth Budget, which was delivered on Wednesday.
It is certainly the case that this Budget, Osborne’s best-crafted, contained some positive messages for business: a 20% across-the-board Corporation Tax rate from 2015; a £2,000 discount on employers’ National Insurance; a BCC-proposed Growth Vouchers scheme; a freeze on fuel duty; and a further shift of current spending toward capital investment, at least from 2015 onward. There is no question that the Chancellor wanted to be seen as pro-growth and pro-business.
Yet it was also clear that the voting public may have come higher in the Coalition’s priority list, leading me to question whether the government, or any of our politicians, have the courage to take the tough decisions the UK economy really needs.
First, most of the good measures in the Budget feel marginal at a time when large-scale, radical action is needed. For example, the much-emphasised re-direction of cash toward infrastructure will only be worth around 0.2% of public spending per annum on today’s figures. While Whitehall would stress that the Chancellor had limited room for manoeuvre, he could have gone further if the government had embarked on a more radical re-prioritisation of government spending.
Second, the government’s seeming aversion to direct investment, for example in house-building, has led to yet another complicated set of mortgage-assistance schemes that run the risk of a mini-credit boom and new asset bubbles.
And third, there was a real sense of “jam tomorrow” in most of these announcements, when Britain’s listless economy needs a jump-start today. With few exceptions, the new schemes announced take effect in 2014 and 2015. There was no urgent relief on business rates, no immediate road maintenance, and no immediate house-building.
Big, bold, confidence-boosting measures could have been delivered and paid for without increasing the deficit; yet it seems that consistency, rather than courage, won the day. It remains to be seen whether that choice will pay off.
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