Some predictions for today’s Chancellor’s Budget

NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.

Like him or not, but Osborne is thought by a consensus in business as being credible. The nature of changes to British Finance Acts is that much of the detail is leaked over the course of the year.

He has failed to reduce the budget deficit and bring down debt, so we can expect further spending cuts. Notwithstanding this he has expressed an intention to spend on “big projects”.

In my view increased cuts and improved efficiency in the public sector is a necessary evil. The alternative, to increase tax take, is likely to be too painful for our fragile economic system to withstand.

Rumour has it that with a new governor of the Bank of England may loosen monetary policy, allowing inflation to increase. This has the impact of effectively rewarding individuals who have been fiscally flippant, and, especially coupled with saving rates that have been demolished, will penalise savers and those on fixed incomes.

My expectation is for a tepid budget, with no surprises. However one of the bizarre symptoms of the coalition is the worrying trend to flip flop. Take inheritance tax: in November we expected no changes to the nil rate band until 2016, Osborne unexpectedly increased the nil rate band in December only to freeze it until 2019 a little over a month later! There is no consistency in fiscal policy, and the coalition can have a tendency to make changes on a whim.

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26 Jan 2024

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