Belfast Telegraph

Osborne gave with one hand, took with the other

The Chancellor made the best of a bad job in yesterday's Budget, says Angela McGowan

George Osborne could not have picked a worse day to deliver his Budget speech. The news over the last week has been grim, with high inflation, rising unemployment and a further foreign military intervention in Libya all to pay for.

The UK economy has clearly been struggling and the 0.6% contraction in Quarter 4 GDP was a stark reminder to the chancellor that tough talk about austerity and widespread cuts can wreak havoc with confidence, investment and private consumption.

The Government has now conceded that, perhaps, its prediction for the impact of austerity on economic growth was not accurate.

And, so, its forecast for UK growth was yesterday revised down significantly - from 2.1% to 1.7%.

The UK economy is in dire need of some stimulus and the Government have - quite correctly - placed more focus upon stimulating enterprise and improving business conditions.

Corporation tax at the national level is to be cut by 2% in April and a separate paper on Corporation Tax for Northern Ireland is to be published today.

But Chancellor Osborne is aware that it is not just large corporations that create jobs - small business is where the bulk of job-creation appears.

Thus, this Budget contained a reasonable focus on supporting enterprise via new tax-breaks for investors in small companies.

It also included a promise to widen the scope of the Enterprise Investment scheme. Enterprise zones were endorsed and promises were made to reduce the burden of regulation on micro-businesses for the time being.

Yesterday's Budget was also an attempt to send out a signal of support to stretched households who have lost confidence in the Government's ability to get the economy onto a sustainable path.

There were some sweeteners for workers in the Chancellor's raising of the tax-free personal allowance.

But for many public-sector workers in the UK, widening the tax-free allowance is irrelevant when the threat of job-losses hovers over them.

While Chancellor Osborne gave away with one had, he also snatched a bit back with the other.

He announced 750,000 people in the UK will now find themselves paying 40% on a proportion of their income where they did not before. National Insurance is also to rise by 1%.

Many households will welcome the token efforts to alleviate fuel costs, but - once again - the ongoing crises across the Middle East will dictate how energy costs significantly shift in the months ahead.

For young people, Chancellor Osborne also held out the promise of more funding for apprenticeships and work-experience placements.

But when we compare this extra funding for the unemployed youth to the cuts in university funding coming down the road, it is very difficult to say that young people gained anything from this Budget.

Everyone knew that this would not be a giveaway Budget, indeed it was a very neutral one; small gains for some individuals and a little more support for business.

Given the Chancellor's limited hand, it is probably fair to say that he has made the best of a bad job.


From Belfast Telegraph