Editors Blog
Painting by numbers
23 Apr 09
Budget picture is not a pretty one, and seems to lack a sense of strategy
I make no claims to be an economist, but even I was taken aback at the Chancellor's forecast in yesterday's Budget speech that within two years our economy will be growing at an annual rate of 3.5%.
Such a rate has seldom been seen even in the good times, and if the Government's financial planning is seriously based on this prediction, I fear we are in for a rude shock not only at the eventual outcome, but for what it will mean in terms of the tax take required even to keep the country's deficit to the massive levels now forecast, never mind bringing us back closer to balancing the books.
As for the particular measures announced, so far as most closely affecting the legal profession, lawyers and others connected with the property industry have pointed out that the stamp duty "holiday" is of limited scope to act as much of an incentive. The business measures such as the tax relief on capital spending are more generous; but even so, as a package they only come to about a quarter of the cost of the temporary VAT cut, and has anyone yet claimed that that is having a positive impact? Usually its only effect is to give you a slight surprise when you find yourself paying a little less than the ticket price for something, and surely that is one giveaway that is ripe for some redistribution.
Mr Darling had little room for manoeuvre overall, and it shows, but given the rapidly changing, and deteriorating, state of the nation's finances, a more active ongoing assessment of measures put in place, with a willingness to re-target help in any of a number of potentially more effective directions, might inspire more confidence that the Government does indeed have a strategy to put us back on track for growth.