There were low expectations heading into today’s Budget statement. Whilst the Chancellor did manage to provide some modest assurances, we are still lacking the long-term vision that is truly needed.
We have been reminded of the fiscal and economic challenges we still face. Our growth and productivity forecasts have been downgraded, and whilst our debt as a proportion of GDP will begin to fall next year, we must remember that the debt will actually continue to grow in the years that follow. This paints a gloomy picture of our prospects heading towards Brexit.
Indeed on Brexit, an additional £3 billion on planning for our departure may sound sensible, but may still not be enough to provide the certainty that is needed.
A Gentle Nod to Business
Support for businesses should always be a priority, and there were a number of welcome measures in this respect.
There was a positive emphasis on technological change, particularly with new funding from the British Business Bank for 5G, fibre broadband and artificial intelligence. These investments will provide valuable support for SMEs, particularly start-ups who are short on initial cash.
Maintaining the VAT threshold at £85,000 should also be commended. However, the fact remains that it falls disproportionately on smaller businesses. We should now look at measures to ease businesses into VAT to avoid the ‘cliff edge’ effect.
Increasing business rates in line with CPI rather than RPI is also a small step in the right direction.
Our tax system remains bloated and complicated. The Chancellor did not add to it, but nor did he use the opportunity to begin simplifying it. This would have been key to promoting investment and nurturing innovation.
From Spreadsheet Phil to PowerPoint Phil
Politically, this was a Budget of showmanship; the Chancellor proved that he is not afraid to splash some cash on public investment, with generous commitments on education and infrastructure. But public investment must be matched by business investment, and proper incentive for businesses to invest significantly is still lacking.
Economic growth continues to disappoint and, whilst there was a welcome focus on the increase in productivity needed to remedy this, we will need bolder and more creative measures to achieve it. There was also a notable lack of mention as to when our economy will return to surplus.
What is clear, is that eliminating our deficit is rapidly becoming a five-parliament problem and an enormous burden for future generations.
Surely to eliminate a deficit, you just have to stop spending more than you have coming in, no?