We have not been short of budgets recently. Last year we had a spring one, a summer one, and a full Autumn Statement. We have a pretty good idea of what the Office of Budget Responsibility thinks will happen, and can watch it adjust its forecasts in line with conventional wisdom and market gyrations.
This bugdet takes place against the background of a downswing in fashionable opinion, just as the Autumn Statement took place against the background of a modest upswing in optimism. Last time the Chancellor was told he had money to spend or give away, whilst still hitting his targets in four years time. This time he will be told he has to rein in spending or increase revenue to hit those same targets. One wonders if anything real has changed since December to justify this change fo stance.
The OBR will say they are now pessimistic because they now know China is slowing, stock markets have fallen and Japan has adopted negative interest rates. Yet we knew China had a slow down last year when we last looked at the economy. We knew Japan was continuing with ultra low rates and Quantitative easing, as the economy is not responding well to the medicine. We had an oil price collapse late last year, and now have an oil rally.
The budget revisions are likely to show even lower interest rate costs, to partially offset the forecast of lower tax revenues which will flow from the lower economic growth forecasts we will doubtless be given. Playing around with £4bn spending in 2019 in a budget of £800 bn spawns headlines but is no great event affecting jobs, lives and incomes anytime soon. It would be good instead to look at the big longer term picture.
That tells us all the time the UK continues with its high migration policy of commitment to the EU’s single market with free movement, we are going to need a lot more capacity on our transport networks and in energy. Could this budget please do something more decisive to give us the future capacity we will need?
If we need to raise so much extra tax revenue, can we please this time try and set taxes like high end income tax, CGT and Stamp duties at rates more people will stay to pay? We have seen how cutting the top rate of Income Tax from 50% to 45% brought in an additional £8bn. Lower rates make the rich pay more tax and higher proportion of the tax take.
As we want a march of the makers, can we not only generate much more cheaper power and provide more domestic cheaper energy, but can we also get the UK public sector to buy more things at home for a change? Why can’t our submarines be made from British steel? Why do we need to import technology for nuclear power when we have domestic technologies for generating power in other ways?
As we want to get wages up so people can spend more and enjoy a higher standard of living, why not insist on proper controls on our borders and explain to the EU that we just have to do that for Uk democratic and economic reasons? I see Austria has gone to the extreme of simply putting up a fence to keep people out despite the rules. We don’t need to do that. We just need some clear fair rules which we enforce at our borders.