The Great Debate UK
By Joe White
Delivering his second budget speech yesterday, Chancellor George Osborne revealed that he is leaving in place all of the austerity measures which will have a direct impact on the public sector. Meanwhile, there was a lot of policy aimed at supporting business and the private sector. The implicit assumption is that the private sector will take up the slack and continue to drive growth. This is the gamble, and we will have to wait and see if it works.
The government’s predictions for growth are down, and the reliance on the OBR forecasts could come back to haunt George if it starts to get worse and they continue to further revise down their independent estimates. Growth is the ultimate balancing factor for the public finances, so it is all important.
Simplification was a big part of this budget. Focusing on making the tax code easier to understand (43 tax reliefs abolished), and a potential merger of National Insurance and income tax will help. The calculation of payroll taxes is something that can only be done by a seasoned professional, so simplification matters and we can build on this.
Simplification also affects medium and longer term decisions to invest in the UK, as it makes a more attractive prospect for business. Flagging the 50 percent tax rate as temporary is also a nod in this direction to say, “stick around, it will get better”. Corporation tax is coming down for the same reason.
By Dr Gerard Lyons
This was a good budget in difficult times. Trouble is, just how difficult the times are is still not fully appreciated. The economic environment the Chancellor inherited was not good. The recent economic performance has not been good. And there is no reason to think it will get better anytime soon. Indeed the scale of fiscal tightening previously announced will probably weaken growth further in the near-term. The UK economy faces a long, hard slog.
Today’s budget provided some clarity about what type of economy the Chancellor hopes to see in the future. And there the message was well directed. One of Britain’s biggest problems has been its lack of strategic thinking. It still has some way to go on this to compete with China, Germany and many other economies. The budget outlined four areas the government wants to focus on, all of which made sense:
The second budget presented to Parliament by Chancellor George Osborne is likely to be less talking and more doing when it comes to bringing the UK’s public finances under control.
This won’t be to everyone’s tastes. Some argue that the UK is in less financial danger than Europe’s financially troubled states, yet Osborne is embracing deficit reduction plans with as much gusto as Ireland or Greece.
By Bobby Lane, Partner at Shelley Stock Hutter LLP. The opinions expressed are his own.
Everyone in my practice, and no doubt anyone advising the five million UK small and medium-sized enterprises (SMEs), welcomed the Prime Minister’s latest show of support for them at the recent Conservative Party conference.
By Thomas Story, Tax Director, BDO LLP. The opinions expressed are his own.
George Osborne has promised that measures to boost sustainable growth will be central to this week’s Budget. To meet this objective, the Chancellor faces the challenge of accelerating the reform of business taxation within the severe constraints imposed by the overall fiscal position and the political imperatives of the coalition government.
Many previous reforming Chancellors have benefited from a more benign fiscal outlook to facilitate fundamental fiscal reform (Nigel Lawson and Gordon Brown spring to mind). The daunting fiscal deficit means that any tax reforms must be achieved within a tax neutral framework; Geoffrey Howe’s Budgets in the early 1980s are a closer precedent but the need to accommodate both parties to the coalition agreement provides additional dilemmas in 2011.
In the end, the ‘leaks’ worked. The various snatched photographs of briefing documents leaked in the past couple of days meant that the real story of the Spending Review was the absence of any shocks. The government managed our expectations, so political new junkies and the money markets were not really surprised as Chancellor George Osborne outlined the cuts today.
Some benefits, such as the winter fuel payment and free entry to galleries and museums, had been considered low hanging fruit, almost certain to go, but the Chancellor surprised the gallery by throwing out a few spending commitment trinkets as he wielded the axe elsewhere.
Rachel Mason is public relations manager at Fair Investment Company. The opinions expressed are her own.-
So the new coalition government is putting VAT up from 17.5 percent to 20 percent on January 4 2011 and the country is up in arms, but is it really that bad?
-Tony Cleaver is senior teaching fellow in Economics and Finance in the Durham University School of Economics, Finance and Business. The opinions expressed are his own.-
George Osborne is taking a risk.
The Chancellor is also placing himself firmly in the orthodox school of financiers who assert that governments must balance their own books even in times of recession.
- David Byrne is a professor at the School of Applied Social Sciences, Durham University. The opinions expressed are his own. -
Reuters’ guest blogger Laurence Copeland omitted two words in his description of Tuesday’s budget – the words being ‘stupid’ and ‘unfair’.
-Joe White is managing director of Moonfruit.com. The opinions expressed are his own. Join Reuters for a live discussion with guests as UK Chancellor George Osborne makes an emergency budget statement at 12:30 p.m. British time on Tuesday, June 22, 2010.-
The first Tory budget is a critical one. The Treasury and Chancellor George Osborne have been dropping hints for weeks about a big slash in public sector spending in an effort to try and prepare Whitehall for the worst, and to rally the private sector to step in and fill the deficit.